AUD/USD Forex Signal: Weakly Bullish

Adam Lemon

The AUD has been boosted by the RBA's September tapering talk.

Last Thursday’s AUD/USD signals produced a nicely profitable short trade entry from the bearish reversal at the resistance level I identified at 0.7403.

Today’s AUD/USD Signals

Risk 0.75%

Trades must be entered prior to 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 0.7403, 0.7424, or 0.7450.

  • Put 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

  • Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 0.7375, 0.7356, or 0.7322.

  • Put 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 we were seeing more bullish movement, but the AUD seemed relatively weak despite that. I saw the price was going to strongly challenge the round number at 0.7400. I thought that if the price could get established above 0.7403 over the coming hours, that will be a minor bullish sign. I also thought that this currency pair remained more interesting to trade short than long.

These were pretty good calls as the price failed at 0.7403 and gave a profitable short trade entry.

The technical picture is a little different as the weakly bullish picture has persisted despite this downwards thrust. The upper triangle trend line was giving some resistance but has now been broken so we are left only with a weakly ascending structure supported by a trend line, which is more bullish. However, the tilt is only weakly bullish, and the price is still unable to break above the proven pivotal level at 0.7403. The bullish boost was caused in recent hours by the RBA’s policy release which indicates that QE tapering will be on the table next month, which is seen as a hawkish tilt to monetary policy.

The big question here is whether the AUD can really advance despite its long-term weakness. The first evidence that might be true will come by the price getting established above 0.7403. If that does not happen today and the price falls, that will suggest the bearish trend will be resuming instead.  

AUD/USD

There is nothing of high importance scheduled today concerning either the AUD or 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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