AUD/USD Forex Signal: Bearish Trend Lines Suppressing Price

Adam Lemon

We still have two important bearish trend lines which are suppressing the price, even though the bearish momentum has reduced considerably.

Last Thursday’s AUD/USD signals produced a profitable short trade from the bearish reversal at 0.7779.

Today’s AUD/USD Signals

Risk 0.75%

Trades must be taken before 5pm Tokyo time Wednesday.

Short Trade Ideas

  • Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.7779 or 0.7816.
  • Place 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 0.7741 or 0.7696.
  • Place 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 although we had seen a recovery of riskier currencies such as the AUD against the USD in recent hours, the wider price chart hinted that a symmetrical bearish price channel had begun to form, which suggested that we would see lower prices in this currency pair over the medium term.

I thought that a bearish reversal at 0.7779 (as confluent with the upper trend line of the bearish price channel) would be the best trading opportunity of the day.

Although the price has really gone sideways over the past few days, the picture is still quite bearish and I was precisely correct about a short trade from 0.7779, so this was a good call.

We have less of a price channel now, but we still have two important bearish trend lines which are suppressing the price, even though the bearish momentum has reduced considerably. Furthermore, although we have seen many major currencies gain against the USD, we are seeing quite weak and limited gains by the AUD against the USD, suggesting the AUD may be suffering from relative weakness.

Despite all this, the late Asian session has produced some gains and the price now seems to be rising to challenge the bearish trend lines. If we do get a bullish breakout beyond the trend lines shown in the price chart below plus the horizontal resistance level at 0.7779, that would be a bullish sign of a medium-term trend change.

I will take a bullish bias on this currency pair today if we get two consecutive higher closes above the level at 0.7779.

AUD/USD

Concerning the USD, there will be a release of CB Consumer Confidence data at 3pm London time. There is nothing of high importance scheduled for today concerning 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

Did you like what you read? Let us know what you think!

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

0 User comments

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

Read more
Add new comment
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Sample