AUD/USD Forex Signal: Wide Consolidation Above 0.7642

Adam Lemon

We are seeing quite wide swings and the dominant technical feature in the price chart shown below seems to be the support at 0.7642.

Last Tuesday’s AUD/USD signal produced a profitable long trade from the engulfing candlestick structure which gave a nice bullish bounce from the support level I had identified at 0.7726. This gave a total profit of about 44 pips.

Today’s AUD/USD Signals

Risk 0.75%.

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

Short Trade Idea

  • Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.7726 or 0.7766.

  • 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.

  • Keep 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 Idea

  • Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 0.7642.

  • 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.

  • Keep 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 the technical picture had become more bullish, with the price printing new higher support levels, and making a new long-term high the previous day.

I thought that the nearest support at 0.7768 looked likely to be pivotal – but I was wrong about that, it was the 0.7726 level which was important, and produced a moderately profitable long trade from the bullish bounce there.

The price has made a deeper bearish retracement over the past few days as the U.S. dollar has begun to strengthen after falling consistently to new lows over recent weeks and months. Market sentiment is somewhat mixed, although still broadly in favour of riskier currencies. However, rising U.S. treasury yields are boosting the greenback, which complicates the situation in this currency pair.

We are seeing quite wide swings and the dominant technical feature in the price chart shown below seems to be the support at 0.7642 – I think we will see the price remain above that level but continue to consolidate over the medium term due to the absence of many relevant data releases in this week’s schedule.

The resistance level at 0.7726 also looks strong and is holding after being tested over the past hour or so at the time of writing.

The best approach today is likely to be trading reversals from either of these two levels. A breakout from this range is worth noting as a sign of more likely medium-term price direction.

AUD/USD chart

There is nothing of high importance scheduled today regarding either the AUD or the USD.

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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