AUD/USD: 0.6841 looks pivotal
Yesterday’s signals were not triggered as there was no bullish price action when the support level identified at 0.6902 was first reached.
Today’s AUD/USD Signals
Risk 0.75%.
Trades must only be entered from 8 am New York time Wednesday to 5 pm Tokyo time Thursday.
Long Trade Ideas
- Go long following bullish price action on the H1 time frame immediately upon the next touch of 0.6841 or 0.6774.
- Put the stop loss 1 pip below the lowest recent price.
- Move the stop loss to break even once the trade is 20 pips in profit.
- Take off 50% of the position as profit when the trade is 20 pips in profit and leave the remainder of the position to run.
Short Trade Ideas
- Go short following bearish price action on the H1 time frame immediately upon the next touch of 0.7109.
- Put the stop loss 1 pip above the highest recent price.
- Move the stop loss to break even once the trade is 20 pips in profit.
- Take off 50% of the position as profit when the trade is 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 yesterday that the technical picture was mixed, as we were seeing both higher lows and lower highs.
Therefore, I expected that it would be wise to be cautious in trading this pair over the day.
This was a good call and enough to keep out of trouble, as the breakdown of expected support at 0.6902 showed the only level was not acting reliably.
The technical picture has now become more bearish, as there are obvious trend lines that can now be drawn that give us a bearish price channel, as shown in the chart below.
The price is making a bearish turn over the short term from an area near the top of this channel, which suggests that lower prices are most likely. However, there is a strong and supportive level below at 0.6841 which looks very pivotal.
I am not eager to take a long trade from a bounce at 0.6841. I prefer to take a short bias if we get two consecutive hourly closes below 0.6841 after New York opens, as this could see a run down all the way to the lower trend line which currently sits at about 0.6725.
Alternatively, if we get two consecutive hourly closes above 0.6950 following a breakout above the bearish channel, that would be a bullish sign causing me to take a bullish bias.
Regarding the USD, there will be testimony from the Chair of the Federal Reserve before Congress at 3pm London time. Concerning the AUD, there will be releases of Employment Change and Unemployment Rate data at 2:30am.