AUD/USD Forex Signal: Bearish Price Channel Emerges

Adam Lemon

The 0.7750 area is looking pivotal.

Last Tuesday’s AUD/USD signals produced a profitable long trade from the bullish inside candlestick reversal and break from the support level identified at 0.7683. It looks as if the bullish move has probably played out by now, so it may be wise to exit any remainder of this long trade still open.

Today’s AUD/USD Signals

Risk 0.75%

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

Short Trade Ideas

  • Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.7756, 0.7767, 0.7800, or 0.7816.
  • 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 0.7696, 0.7683, or 0.7673.
  • 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 Tuesday that the consolidation pattern with wide, clear swings was holding. I thought that this range was likely to hold so I was seeking a long trade from a bullish bounce at 0.7696, or a bearish reversal from 0.7816.

I was a bit off, as the lower edge of the range temporarily broke down, before the price made a strong bullish bounce from the support level at 0.7683.

The technical picture has now changed from one of wide consolidation to a symmetrical bearish price channel, which suggests that the price is likely to move lower. The short-term rise has brought the price up close to the upper trend line which could produce a nice bearish reversal point at which to enter a good short trade.

I am therefore happy to enter a short trade from a bearish reversal at 0.7756.

Alternatively, if there is no bearish reversal there and the price instead rises to get well established above the next higher support level at 0.7767, that would be a bullish sign signifying that the price would next be likely to rise higher, to at least the round number at 0.7800.

AUD/USD

Regarding the AUD, there will be a release of the Reserve Bank of Australia’s Monetary Policy Statement at 2:30am London time. There is nothing of high importance scheduled concerning 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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