AUD/USD: Bearish reversal from multi-month high price
Yesterday’s signals were not triggered as there was no bullish price action when the support level identified at 0.6957 was reached.
Today’s AUD/USD Signals
Risk 0.75%.
Trades may only be taken between 8am New York time Tuesday and 5pm Tokyo time Wednesday.
Long Trade Ideas
- Long entry following bullish price action on the H1 time frame immediately upon the next touch of 0.6868 or 0.6774.
- 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 Ideas
- Short entry following bearish price action on the H1 time frame immediately upon the next touch of 0.6957 or 0.7000.
- Place the stop loss 1 pip above the highest price made today.
- Adjust the stop loss to break even once the trade is 10 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 there was no reason not to be bullish except for the fact that 0.7000 was still holding the price down. However, I thought that the price was likely to break up above it, where it would have about another 100 pips to rise with little likely resistance.
I was ready to take a bullish bias if we had gotten two consecutive hourly closes above 0.7000 after New York opens.
I was right about the price breaking above 0.7000 although I did not expect this to happen so quickly. Unfortunately, my long bias call did not work out well as after making a few long pips, the Asian session saw a firm downturn in risky assets like the Australian Dollar and a resumption of buying safe havens such as the USD, driving the price back down and reaching well below the psychologically important 0.7000 level.
I see this bearish movement as a normal retracement, so I expect sentiment is likely to change sooner rather than later.
The nearest support level at 0.6868 has been crucial in the recent past, so I would be willing to take a long trade later today from any bullish bounce we might get there after New York opens.
A short trade from a bearish reversal at 0.7000 might also provide a good medium-term trade entry.
There is nothing of high importance due today concerning either the AUD or the USD.