My last signal on 20th April was not triggered as there was no bearish price action when the price first reached the resistance level which I had identified at $0.6753.
Today’s AUD/USD Signals
Risk 0.75%
Trades may only be entered before 5pm Tokyo time Wednesday.
Short Trade Ideas
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of $0.6712, $0.6736, $0.6744, or $0.6768.
- Place the stop loss 1 pip above the local swing high.
- Move the stop loss to break even once the trade is 20 pips in profit.
- Remove 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to ride.
Long Trade Ideas
- Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of $0.6670, $0.6644, or $0.6620.
- Place the stop loss 1 pip below the local swing low.
- Move the stop loss to break even once the trade is 20 pips in profit.
- Remove 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to ride.
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 the symmetrical bearish price channel, although I was happy to trade either long from $0.6678 or short from a bearish bounce at $0.6753.
Neither trade set up, so this was not useful except for keeping out of trouble.
The technical picture is more bullish today, on the big news that the Reserve Bank of Australia earlier made a surprise rate hike in its Cash Rate by 0.25% to a rate of 3.85%. Few analysts were expecting this move, with persistent inflation above 7% with a long way to fall to its target cited by the Bank as justification for its move.
Markets reacted by buying the Aussie, pushing its price up firmly.
The rise in this currency pair broke cleanly through more than one resistance level, but we now see initial signs of the rise being halted by the nearest resistance at $0.6712. We may already have seen the high for the day, the question is whether the rate hike is just going to produce this spike or a more sustained bullish trend.
Although we saw the price break out of the former symmetrical bearish price channel a few days ago, the price is still below highs that it reached quite recently. Adding to the factors against the bullish case, there are three resistance levels packed quite close together above $0.6712 (until $0.6744), so I think the price will struggle to advance further today. Having said that, shorts could be dangerous, but I think scalping short trades from bounces off any of the resistance levels and monitoring the trade carefully on a short time frame, will be the best way to trade this currency pair today.
Regarding the AUD, the Governor of the RBA will be speaking at the RBA Board Dinner at 12:20pm London time. Concerning the USD there will be a release of JOLTS Job Openings data at 3pm.
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