Yesterday’s signals were not triggered, as there was no bearish price action at either 0.7054 or 0.7066.
Today’s AUD/USD Signals
Risk 0.75%.
Trades may only be taken from 8am New York time Tuesday until 5pm Tokyo time Wednesday.
Long Trades
Long entry following some bullish price action on the H1 time frame immediately upon the next touch of 0.7065, 0.7052, 0.7039 or 0.7027.
Place 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.
Remove 50% of the position as profit when the trade is 20 pips in profit and leave the remainder of the position to ride.
Short Trade
Short entry following some bearish price action on the H1 time frame immediately upon the next touch of 0.7117.
Place 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.
Remove 50% of the position as profit when the trade is 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 yesterday that the situation seemed to be more bearish, as we had the price touching and rejecting to the pip the long-term bearish trend line. However, we had support very close by at 0.7039 although this level did not look particularly reliable. I thought that in the unlikely event that the price could get established above 0.7066 later, then that would be a very bullish sign.
I think this was a good call although I was surprised by the fact that the price has moved up firmly albeit slowly. The most likely scenario is one of higher prices later today, but the bullish move may be running out of momentum at 0.7080. Much is likely to depend upon the U.S. inflation data release due later today. I think there is more upside than downside potential, but I note that the NZD looks stronger than the AUD, so it may be better to try to capture further bullish movement in NZD/USD instead of trying to do it here.
I wrote last week that we may see a long-term bullish reversal close to 0.7000 and this turns out to have been the case, probably. I do not see a lot of potential downside because we see such congested support levels (four of them) between 0.7025 and 0.7065.
There is nothing of high importance due today concerning the AUD. Regarding the USD, there will be a release of CPI data at 1:30pm London time.