AUD/USD: Yet resistance at 0.7300 looks strong
Yesterday’s signals were not triggered as there was insufficiently bearish price action when the resistance level at 0.7241 was first reached.
Today’s AUD/USD Signals
Risk 0.75%.
Trades must be taken between 8 am New York time Thursday and 5 pm Tokyo time Friday.
Long Trade Ideas
- Go long following bullish price action on the H1 time frame immediately upon the next touch of 0.7264, 0.7229, or 0.7187.
- 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 0.7300, 0.7317, or 0.7340.
- 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 if stock markets continued to bounce back later as they had in recent hours, and the price here broke above 0.7250, we could see a further rise.
This was a good call as it reflected what happened. However, the price has not advanced much more beyond 0.7250 so the rise is relatively weak.
The bullish case is strengthened a little by new higher support levels at 0.7229 and 0.7264.
There is no doubt that the level in the price chart below which really jumps out is the strong resistance at 0.7300 and the lack of pace in the current weak bullish movement probably has something to do with the pressure from 0.7300 quite nearby being felt.
I think the best opportunity we might see today will only set up if the round number at 0.7300 is reached. A strong bearish failure to rise above that price could give a good short trade especially if the U.S. stock market starts to fall strongly later as the AUD is such a risk barometer these days.
Alternatively, two consecutive hourly closes later above 0.7300 would be a bullish sign and I am prepared to take a long trade here if that happens, targeting 0.7340.
There is nothing of high importance due today regarding either the USD or the AUD.