AUD/USD Forex Signal: Bearish Channel Breaks to Upside - 23 January 2020

AUD/USD: More bullish above 0.6856

Yesterday’s signals were not triggered as there was no bearish price action at 0.6868.

Today’s AUD/USD Signals

Risk 0.75%.

Trades may only be entered from 8am New York time Thursday until 5pm Tokyo time Friday.

Short Trade Idea

  • Short entry following bearish price action on the H1 time frame immediately upon the next touch of 0.6889.

  • 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.

  • Remove 50% of the position as profit when the trade is 20 pips in profit and leave the remainder of the position to ride.

Long Trade Idea

  • Long entry following bullish price action on the H1 time frame immediately upon the next touch of 0.6856, 0.6817, or 0.6803.

  • 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.

  • 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 I was ready to take another short trade from a bearish reversal at 0.6868 if that happens before the support level at 0.6817 is hit. The area between 0.6817 and the round number at 0.6800 was likely to produce some kind of bullish movement which could end up invalidating the bearish price channel.

This was an OK call but was irrelevant as the price never reached as far as 0.6817. However, I was correct to be watching the bearish price channel as it was the breakout from that formation which produced a bullish movement, although actually the price has not got above its high that was made immediately following the break.

I think it is going to be difficult to trade this currency pair today, because this bullishness in the AUD was caused by stronger than expected Australian economic data, and is not supported by wider risk-off market sentiment which should be bad for the AUD and good for the USD. I also note that technically the price may have new higher support at 0.6856 but has not exceeded the swing highs at about 0.6880. Therefore, I think the best strategy is to wait and see whether the price can get established below 0.6856 (bearish) or above 0.6889 (bullish).AUDUSD

There is nothing of high importance due today concerning either the USD or the AUD.

Adam Lemon

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.