AUD/USD: 0.7250 area remains pivotal
Yesterday’s signals were not triggered, as there was no bullish price action when either of the support levels at 0.7248 and 0.7229 were reached.
Today’s AUD/USD Signals
Risk 0.75%.
Trades must be taken between 8 am New York time Tuesday and 5 pm Tokyo time Wednesday.
Long Trade Ideas
- Go long following bullish price action on the H1 time frame immediately upon the next touch of 0.7187, 0.7139, or 0.7121.
- Place the stop loss 1 pip below the lowest recent price.
- Adjust 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 ride.
Short Trade Ideas
- Go short following bearish price action on the H1 time frame immediately upon the next touch of 0.7229 or 0.7248.
- Place the stop loss 1 pip above the highest recent price.
- Adjust 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 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 short-term action was bearish. However, as the support confluent with the key psychological quarter-level at 0.7250 seemed to be so well-established I was prepared to take a long trade there if there had been a bullish bounce from it.
I thought the range (with the lower boundary at 0.7248) was likely to hold.
I was wrong about the range holding, as we got a fairly strong bearish breakdown. However, waiting for a bounce before taking a long entry at 0.7250 was enough to stay out of trouble.
Risky assets were hit yesterday on renewed fears of another strong wave of coronavirus infections impacting Europe, as well as recent statements from the U.S. Federal Reserve that the economic situation remains fragile over the medium term.
The Australian Dollar and stock market were especially badly hit due to the exposure of the Australian economy to risk sentiment.
Despite all this, risky assets have staged a recovery over the past half-day or so, and we see a small bullish bounce from the support level at 0.7187 also.
I think the edge will remain with bears as long as the price remains below 0.7248 which will probably be a pivotal resistance point. A short trade from a bearish reversal at that level looks attractive.
There is nothing of high importance scheduled today regarding the AUD. Concerning the USD, the Chair of the Federal Reserve will be testifying before Congress at 3:30 pm London time.