AUD/USD Forex Signal: Bearish Price Channel

Adam Lemon

AUD/USD: Pivotal point likely at 0.7180

Yesterday’s signals were not triggered as none of the key levels identified were hit.

Today’s AUD/USD Signals

Risk 0.75%.

Trades must be taken between 8 am New York time Wednesday and 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 0.7145 or 0.7100.
  • 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 0.7176, 0.7204, 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 area at about 0.7200 was going to be the day’s pivotal point. If the price remained below it, it was likely to move down to test 0.7168 again.

I was ready to take a short trade from 0.7204.

This was a good call as the price did continue to move down after having rejected 0.7204, making a low at about 0.7150 well beyond 0.7168 before recovering.

The price chart below shows that there have been two interesting technical developments. Firstly, the price is within a short-term symmetrical bearish price channel, which is likely to have an effect by either holding or breaking. This suggests that the area at about 0.7180 is very likely to be pivotal today. If we get a bullish breakout beyond that, it could produce a quick upwards movement.

The other thing to note is that overall neither bulls nor bears really have the upper hand. Price action is likely to be slow, somewhat ranging, and possibly choppy too.

I see the opportunity here as most likely to be trading the pivotal point at 0.7176 on short time frames, either from a bearish reversal there or following a bullish breakout, using tight stops and closely monitoring the progress of any trade.  

AUD/USD

There is nothing of high importance due today regarding the AUD. Concerning the USD, there will be a release of PPI 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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