AUD/USD Forex Signal: Narrowing Consolidation

Adam Lemon

0.7248 holding gives some hope for bulls.

Yesterday’s signals almost produced a long trade from the doji / inside candlestick combination which rejected the support level at 0.7248.

Today’s AUD/USD Signals

Risk 0.75%.

Trades must be entered between 8am New York time Thursday and 5pm Tokyo time Friday.

Long Trade Ideas

  • Go long following bullish price action on the H1 time frame immediately upon the next touch of 0.7248, 0.7204, or 0.7137.

  • 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.

  • Move 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 0.7289, 0.7340, or 0.7361.

  • 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.

  • Move 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 0.7248 remained very pivotal and I was happy to take a long trade if we had gotten a bullish bounce at 0.7248.

I also thought that a short trade if we had gotten two consecutive hourly closes below 0.7248 could be a good opportunity.

This was a good call as we have seen this level at 0.7248 continues to be pivotal, with the price making a bullish bounce there just a few hours ago.

Despite this firm support, the technical picture continues to deteriorate slightly against bulls, with a new lower resistance level printing at 0.7289.

The consolidation above 0.7248 is narrowing.

These last two items are bearish signs.

Increasingly, the opportunity here looks most likely to be when the floor at 0.7248 gives way, triggering a likely cascade of short stops, which could push the price all the way down to 0.7200 at least quite quickly.

I will take a bearish bias if we get an hourly close below 0.7248 after the New York open, which is then confirmed by a failed pullback on a shorter time frame. Day traders should look into this one if it sets up.AUD/USDConcerning the USD, there will be a release of CPI (inflation) data at 1:30pm London time, followed by a minor speech from the Chair of the Federal Reserve at 4:45pm. There is nothing of high importance scheduled today regarding the AUD.

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

Did you like what you read? Let us know what you think!

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

0 User comments

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

Read more
Add new comment
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.