AUD/USD Forex Signal: Bullish Above 0.7750

Adam Lemon

Bulls face barriers at and below the big quarter-number.

 

Last Thursday’s AUD/USD signals may have produced a losing short trade from the bearish price action at 0.7804.

Today’s AUD/USD Signals

Risk 0.75%.

Trades must be entered prior to 5pm Tokyo time Friday.

Short Trade Ideas

  • Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.7811, 0.7839, or 0.7884.

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

  • 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 price reaches 20 pips in profit and leave the remainder of the position to run.

Long Trade Ideas

  • Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 0.7739 or 0.7697.

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

  • 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 price reaches 20 pips in profit and leave the remainder of the position to run.

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 was one of consolidation between 0.7750 and 0.7839. Therefore, I saw the best approach to trading this currency pair as being prepared to trade reversals from either support or resistance levels, provided such trades were managed on short time frames.

I was ready to take a long trade from a bullish bounce at 0.7739 or a short trade from a bearish bounce at 0.7839. However, neither trade set up and the price action was more bearish than I had predicted.

The price has continued to decline over recent days due to a strong advance by the U.S. dollar rather than specific weakness in the AUD. However, we are seeing initial signs of a bullish double bottom formation getting printed from the area of support which begins below the current price at 0.7624.

Despite the short-term bullishness, bulls face hurdles at 0.7729 and of course the big quarter-number at 0.7750, so the upside may well be limited here. These levels can be used as barometers to judge bullishness as a sustained break above 0.7750 today will likely be a bullish sign and suggest a continued rise to 0.7811 if it sets up.

AUD/USD chart

There is nothing of high importance scheduled today concerning the USD. Regarding the AUD, the Governor of the Reserve Bank of Australia will be giving a minor speech at 10pm London time today.

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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