AUD/USD Forex Signal: Bearish Selloff from 0.7250

Adam Lemon

AUD/USD: Weaker Australian Dollar

Yesterday’s signals produced a long trade from the bullish bounce at the support level of 0.7168 which is currently in floating profit. It might be wise to exit from any remainder of this trade now as the technical picture has become more bearish.

Today’s AUD/USD Signals

Risk 0.75%.

Trades may only be taken from 8 am New York time Tuesday until 5 pm Tokyo time Wednesday.

Long Trade Ideas

  • Long entry following bullish price action on the H1 time frame immediately upon the next touch of 0.7168, 0.7145, or 0.7100.
  • 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 following bearish price action on the H1 time frame immediately upon the next touch of 0.7204, 0.7248, or 0.7281.
  • 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.

AUD/USD Analysis

I wrote yesterday that the situation here had become considerably more bullish, but bulls still had to overcome the resistant area at about 0.7250 to get the price meaningfully higher.

I was ready to take a long trade from a bullish bounce at 0.7210, or from the second consecutive hourly close above 0.7250.

Fortunately, 0.7210 broke down relatively quickly and the price never even made it up to 0.7250. This breakdown was an indication of a more bearish situation, which seems to be persisting despite the bullish bounce at 0.7168, as we are seeing a new obvious resistance level at 0.7204 which has held over the last couple of hours.

I think this area at about 0.7200 is going to be today’s pivotal point. If the price remains below it, which I think it will, the price is likely to move down to test 0.7168 again.

The Australian Dollar has become notably less bullish than several other “risk” currencies, so I think if the U.S. Dollar really starts to show persistent strength, there could be some good potential on the short side here.

I am ready to take a short trade from 0.7204 if it is tested again and produces a firm bearish reversal.

AUD/USD

There is nothing of high importance due today regarding the AUD. Concerning the USD, there will be a release of CPI (inflation) data at 1:30 pm London time.

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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