Last Thursday’s AUD/USD signals were not triggered, as the bullish price action took place a few pips below the support level identified at 0.7597.
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 0.7636 or 0.7698.
- 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 0.7575 or 0.7485.
- 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 despite the advance by several major stock markets, the Aussie is no longer the strongest major currency against the Dollar, and the wide-ranging consolidation pattern continues.
I was looking to trade reversals from the edges of the dominant range, but such trades did not set up.
The disconnect between the Australian Dollar and stock markets (at least U.S. and European markets) continues, with the S&P 500 Index making new all-time highs while the Australian Dollar threatens to reach new multi-month low prices. This suggests that capital is now flowing into U.S. stocks from around the world, suggesting that institutional investors may be believing recent statements from the Federal Reserve’s Jerome Powell that U.S. economic growth is about to explode upwards.
The U.S. Dollar’s rise has been muted over recent days due to the USDX facing clear overhead resistance which it cannot break through. This suggests that the USD will find it hard to advance, but the AUD is weak and looking more and more likely to make a decisive bearish breakdown. It is difficult to reach any other technical conclusion from looking at the price chart below.
As a breakdown is looking likely, I see the probable pivotal point at the round number below of 0.7500. I will take a long trade from a bullish bounce there or at the key support level of 0.7485. If we get a daily close below 0.7485, we may well see an accelerated drop, so I would go short after two consecutive hourly closes below 0.7485.
Regarding either the USD, there will be a release of CPI (inflation) data at 1:30pm London time. There is nothing of high importance scheduled today concerning the AUD.