AUD/USD Forex Signal: Bearish Within Triangle

Adam Lemon

The price seems to be making a bullish bounce at the lower, ascending trend line of the triangle.

Last Thursday’s AUD/USD signals produced an excellent and very profitable short trade from the bearish rejection of the resistance level identified at 0.7776.

Today’s AUD/USD Signals

Risk 0.75%.

Trades may only be entered before 5pm Tokyo time Wednesday.

Short Trade Ideas

  • Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.7689, 0.7702, 0.7722, or 0.7748.

  • Place the stop loss 1 pip above the local swing high.

  • Move the stop loss to break even once the trade is 20 pips in profit.

  • Remove 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to ride.

Long Trade Ideas

  • Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 0.7642 or the supportive trend line shown in the price chart below which is currently sitting at about 0.7670.

  • Place the stop loss 1 pip below the local swing low.

  • Move the stop loss to break even once the trade is 20 pips in profit.

  • Remove 50% of the position as profit when the price reaches 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 last Thursday that it was interesting that the AUD was not standing out as the strongest currency anymore. I thought that this hinted at a potential weakening of the Aussie, or at least a return to the very pivotal supportive area at 0.7642.

This was a good call, as the price turned bearish last Thursday and has been falling ever since. The consolidating triangle formation pattern which I drew in the price chart that day has been respected, and the price at the time of writing seems to be making a bullish bounce at the lower, ascending trend line of the triangle.

There is some risk-off sentiment in the market now and this tends to hit the Australian dollar more than any other currency due to the Aussie’s sensitivity to global trade and commodity prices.

If the price breaks below the lower trend line and the support level I have identified at 0.7642, that would be a very bearish sign, and the price would be liable to fall quite sharply. Alternatively, we may well see this triangle hold, meaning that the bullish bounce here at the trend line might be a good opportunity to take a long trade entry.

AUD/USD chart

Concerning the USD, there will be a release of CB Consumer Confidence data at 3pm London time. Regarding the AUD, there will be a release of CPI (inflation) data at 12:30am.

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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