AUD/USD Forex Signal: Ranging Consolidation

Adam Lemon

It may be wisest to stand aside from trading this currency pair today.

 

Last Thursday’s AUD/USD signals produced a nicely profitable short trade from the bearish inside candlestick breakdown which rejected the resistance level identified at 0.7816.

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 0.7668, 0.7683, or 0.7701.

  • 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 0.7555 or 0.7498.

  • 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 I saw the outlook as bullish here provided the support levels held, especially the support at 0.7793 which had just been touched and was likely to be the day’s pivotal point. I did not expect that the price would settle above 0.7839 so I thought that the short-term upside may be limited.

This was a very good call as once the support at 0.7793 broke down, the price fell considerably and did not really stop for several days.

The story of the past week has been an increase in value of the U.S. dollar at the expense of almost every other currency, and the Australian dollar has been no exception to that.

The price is currently consolidating within a wide zone without support or resistance between 0.7555 and 0.7668.

I expect that the consolidation will continue, so I am prepared to take either a short from 0.7668 or a long from 0.7555, but I do not see any other good opportunities as likely to arise here.

Therefore, it may be wisest to stand aside from trading this currency pair today.

AUD/USD

Concerning the USD, there will be a release of Final GDP data at 12:30pm London time. There is nothing of high importance due 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

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