AUD/USD Forex Signal: Pivotal Support at 0.7223

Adam Lemon

The AUD is one of the relatively weak currencies.

Last week’s Tuesday AUD/USD signal produced a profitable long trade from the bullish rejection of the support level I had identified at 0.7305.

Today’s AUD/USD Signals

Risk 0.75%

Trades must be taken before 5pm Tokyo time Thursday.

Short Trade Ideas

  • Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.7245, 0.7281, or 0.7302.

  • 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 0.7223, 0.7218, or 0.7181.

  • 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 on Tuesday last week that the AUD/USD looked likely to be a great currency pair to trade as there was plenty of volatility. I thought that the best approach would be to watch what happened when the price reached the support level identified at 0.7335. After initially making a small bounce at that level, it broke down a few hours later and then over time we saw a continuation of the bearish trend, so I was half correct.

The price moved down by quite a lot over the past week or so, mainly due to souring risk sentiment which boosted the USD and weakened the AUD. The price action is still bearish over the medium term, but we see the support level at 0.7223 holding up strongly and printing what may turn out to be a triple bottom. The question is now whether the price will begin to move up from here and the thing to watch for on the bullish side is whether the price can trade firmly above the nearest resistance level at 0.7245.

On the bearish side, as the price is compressed above 0.7223, we can see that a breakdown below the support zone which seems to end at about 0.7218 will be likely to produce a stronger bearish price movement with some momentum.

The resistance level higher up at 0.7281 looks likely to be strong.

I will enter a new short trade if we get two consecutive lower hourly closes today below 0.7218 or at a bearish reversal at 0.7281 following a bullish retracement which takes the price back up to that level.

AUD/USD

Concerning the USD, there will be a release of Unemployment Claims data at 1:30pm London time then a release of Flash Manucfacturing and Services PMI data at 2:15pm. 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

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.