Last Thursday’s AUD/USD signal produced a losing short trade from the bearish reversal at 0.7384.
Today’s AUD/USD Signals
Risk 0.75%
Trades may only be entered prior to 5pm Tokyo time Wednesday.
Short Trade Ideas
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.7375, 0.7393, or 0.7410.
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 0.7335, 0.7305, or 0.7297.
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 price was sitting heavily at the support level of 0.7349 which was confluent with a half-number at 0.7350 and the momentum suggested a break below that support was likely, so I was looking to take a bearish bias and enter a short trade if we had gotten two consecutive lower hourly closes below 0.7349.
This did not do much as the price rose over the day and kept well above 0.7349.
This currency pair fell towards the end of last week as risk sentiment soured, making the AUD/USD a great currency pair to trade as risk-on tends to lead to flows into the USD and out of the AUD.
This pair looks attractive to trade as it is making some of the biggest price movements in the Forex market right now, so there is action to be had here.
We are seeing a bounce off the support level I have identified at 0.7335 as the London session gets underway and what happens at this level is likely to be predictive of the action we will get later. If the level breaks down, then the short-term bearish trend should continue with a further fall. However, if this level continues to hold up, we will be likely to see the price rise to as high as 0.7375. A later bearish reversal at 0.7375 could also be a good trade.
Generally, I prefer short trades to long trade here today.
Concerning the USD, there will be a release of CPI data at 1:30pm London time. There is nothing of high importance due today concerning the AUD.