AUD/USD Forex Signal: AUD Showing Relative Strength

Adam Lemon

The 0.7218/23 area is looking likely to be today’s pivotal zone.

Last Thursday’s AUD/USD signal were not triggered as there was no bearish price action at any of the three key resistance level which were reached that day.

Today’s AUD/USD Signals

Risk 0.75%

Trades may only be entered prior to 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 0.7218/23, or 0.7264.

  • 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 0.7155 or 0.7149.

  • 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 the thing to watch for on the bullish side is whether the price could trade firmly above the nearest resistance level at 0.7245. It did and rose by another 60 pips approximately over the rest of the day. However, I was really looking for a short trade, but the price action did not give a short setup.

The AUD has over recent weeks been falling harder against a strong USD than most other counterparty currencies. However, we now see an interesting change, with the AUD showing more relative strength against the USD than that shown by many other currencies. We have seen the GBP, the EUR, and spot silver fall to new long-term lows, the Japanese yen also. Yet this morning’s movement against the USD has been manifested more strongly in the AUD than elsewhere, suggesting some relative strength exists in the AUD.

This may not be the most interesting thing about this currency pair, as we have something more pressing – what looks to be a very pivotal price zone not far above the current price, from 0.7218 to 0.7223. This area acted as strong support and may well now have become strong resistance, so I see this as today’s probable pivotal point.

I will be happy to take a short trade from a bearish reversal off 0.7218/23. On the other hand, if we get two consecutive hourly closes above 0.7225, the price may well continue with a weak rise from there. I see the short setup as likely to have better potential if it occurs than any long trade.

AUD/USD

Concerning the USD, there will be a release of Final GDP and Unemployment Claims data at 1:30pm London time followed by the Chair of the Federal Reserve and the Treasury Secretary testifying before Congress at 3pm. There is nothing of high importance scheduled 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

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