AUD/USD Forex Signal: Bullish Breakout Going Nowhere

Adam Lemon

There is no real momentum here at all.

AUD/USD: Market risk sentiment still weak

Last Thursday’s signals were not triggered as unfortunately, the bullish price action at 0.6963 was too weak to trigger a long trade entry, but the level did cap the low of the day to the pip so was very accurate.

Today’s AUD/USD Signals

Risk 0.75%.

Trades may only be taken between 8 am New York time Monday and 5 pm Tokyo time Tuesday.

Long Trade Ideas

  • Long entry following bullish price action on the H1 time frame immediately upon the next touch of 0.6963 or 0.6926.
  • 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.
  • Remove 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

  • Short entry 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.
  • Remove 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.

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AUD/USD Analysis

I wrote last Thursday that we had a short-term bearish head and shoulders pattern that would be completed if the price broke 0.6980.

I thought that it was looking more likely now that the price would move down to the next support level at 0.6963.

I wanted to take a long trade if we had gotten a bullish bounce off that level.

This was a great call and was a completely accurate forecast of what happened next.

Although the price is now holding up above the support level at 0.6963, this bullishness looks extremely weak, as the price is ranging and is only very weakly bullish. There is no real momentum here at all. We also see lower and lower highs from the area near the round number at 0.7000.

For this reason, I will be more bullish once the price gets established well above 0.7000, although I would still be prepared to take a long trade from either of the support levels nearby at 0.6963 or 0.6926.

AUD/USD

Regarding the AUD, the Governor of the RBA will be giving a minor speech at 3:30am London time. There is nothing of high importance scheduled today concerning the USD.

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.
Learn more from Adam in his free lessons at FX Academy

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