My previous signal on 28th November gave an excellent and nicely profitable short trade from the bearish hammer candlestick rejection of resistance level which I had identified at $0.6723.
Today’s AUD/USD Signals
Risk 0.75%
Trades may only be entered before 5pm Tokyo time Friday.
Short Trade Ideas
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of $0.6953 or the upper trend line of the pennant formation drawn within the price chart below.
- Put the stop loss 1 pip above the local swing high.
- Adjust the stop loss to break even once the trade is 20 pips in profit.
- Take off 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to run.
Long Trade Ideas
- Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of $0.6816, the lower trend line of the pennant formation drawn within the price chart below, or $0.6739.
- Put the stop loss 1 pip below the local swing low.
- Adjust the stop loss to break even once the trade is 20 pips in profit.
- Take off 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to run.
The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.
AUD/USD Analysis
I wrote in my previous forecast that the AUD/USD currency pair was presenting a wide consolidation with plenty of price movement, between extremes of about $0.6600 to $0.6800.
I thought that the support at $0.6624 or the resistance at $0.6816 could be good levels at which to find major reversals.
This was a good guide to what transpired over the following days, with the support at $0.6624 not even being reached again, and the price only recently decisively breaking above $0.6816 which now seems to have become a key support level.
This currency pair tends to rise or fall according to risk sentiment, and the past 24 hours have been no exception, with the price declining upon the US Fed’s forecast of higher rates above 5% in 2023.
Despite the decline, the technical picture still looks quite bullish, with a valid medium-term bullish trend, although the trend is a bit weak.
We also see a bullish pennant flag pattern within the price chart, but the price is showing more hints that it will break down and make a bearish invalidation. However, the support level at $0.6816 still looks very important so a long trade from a bounce there, or below that at the lower trend line, could be attractive.
Concerning the USD, there will be a release of Retail Sales data and the Empire State Manufacturing Index at 1:30pm London time. There is nothing of high importance due today regarding the AUD.
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