AUD/USD Forex Signal: Bearish Triangle

Adam Lemon

The price has room to fall below 0.7420.

Last Tuesday’s AUD/USD signals were not triggered, as there was no bullish price action when either of the two identified support levels were reached that day.

Today’s AUD/USD Signals

Risk 0.75%

Trades may only be taken before 5pm Tokyo time Friday.

Short Trade Ideas

  • Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.7467, 0.7485, 0.7505, 0.7524, 0.7537, or 0.7548.

  • 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

  • Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 0.7430 or 0.7367.

  • 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 Tuesday that we were seeing a weak bullish recovery from last week’s low, with the weak bullish advance halted by resistance near the big round number at 0.7500, but with what looked likely to be strong support at 0.7448 – although I preferred a short trade from 0.7505.

This was not a very good call as the price fell and broke through that support level very easily.

We have just seen stronger than expected Australian employment data, but that has done little to boost the AUD.

The technical picture is dominated by a narrowing triangle formation which is squeezing the price. A bearish breakdown looks more likely than a bullish breakout, due to the wider shape and position of the triangle. The line of least resistance looks bearish below about 0.7420.

The AUD looks vulnerable to a renewed advance by the USD. I am not sure that will happen, but if it does, I can see a meaningful downwards movement here.

I am ready to take a bearish bias if we get two consecutive hourly closes below 0.7409, with the second close below the round number at 0.7400. A short from a bearish reversal at 0.7485, which is a horizontal resistance level confluent with the upper trend lines of the triangle, could also be a worthwhile trade here.

AUD/USD

Concerning the USD, there will be a release of unemployment claims data at 1:30pm London time, followed by the chair of the Federal Reserve’s testimony before Congress one hour later. There is nothing of high importance concerning the AUD scheduled 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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