AUD/USD Forex Signal: Bulls Face Key Resistance at 0.7702

 Resistance at 0.7722 also looks strong.

 

Last Thursday’s AUD/USD signals were not triggered, as there was no bullish price action that day when either of the two support levels were reached.

Today’s AUD/USD Signals

Risk 0.75%.

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

Short Trade Ideas

  • Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.7662 or 0.7722.

  • 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 0.7662, 0.7624, or 0.7606.

  • 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 the price was currently caught between a new bearish trend line and the new support level at 0.7606. I thought that price movement could go either way although bears probably had a small edge. For this reason, I thought that if the price could get established later below 0.7600 it would be a bearish sign and likely signal a further fall to the next support level at 0.7555, but I did not have strong faith in this.

This was an OK call, as the price did move down over that day and fell by a further 16 pips once it made an hourly close below 0.7600.

The price moved up strongly on Friday as markets saw a major risk recovery, but despite this firm rise it should be noted that the price has been forming a medium-term bearish channel which is not cleanly defined, but which is likely to have some bearish effect. It seems that the key resistance level at 0.7702 is going to be pivotal in this – bulls need to get the price to hold up above 0.7702 to really change the dominant bearish pattern. The price could easily make a bearish reversal here, so a short trade could be a good bet if we get a bearish reversal at 0.7702 later. The resistance at 0.7722 also looks likely to be firm, so seeking short trades from these levels looks interesting despite the risk-on sentiment which has gripped the market, which suggests higher prices for the Aussie. Nevertheless, it is worth noting that even as stock markets are rising, the USD remains relatively strong, which is why bullish upside is likely to be limited here.

AUD/USD chart

There is nothing of high importance scheduled today regarding 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.