AUD/USD Forex Signal: Bearish

Adam Lemon

Key support levels above 0.7150 are coming into sight.

Last Tuesday’s AUD/USD signal produced a long trade from the bullish inside bar break at the bounce from the support level I had identified at 0.7267. However, this trade barely made enough profit to break even.

Today’s AUD/USD Signals

Risk 0.75%

Trades must be entered before 5pm Tokyo time Wednesday.

Short Trade Idea

  • Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.7271.

  • Put 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 Idea

  • Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 0.7187, 0.7154, or 0.7149.

  • Put 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 consolidation pattern emerging between 0.7321 and 0.7390. I therefore thought that the best opportunities ahead in this currency pair would be likely to be either a long trade from a bounce at 0.7321 or a short trade from 0.7390 again. This was not a great call as the price began falling and has continued moving downwards ever since.

The US Dollar Index in recent days succeeded in breaking above a long-term resistance level and has continued to make strong advances against most currencies, with the Australian dollar no exception. However, the US dollar is breaking into blue sky against the euro and the Japanese yen but has not got there yet against the Aussie.

It looks likely that there is enough bearish momentum to keep the price moving downwards over the course of the day, in the absence of any scheduled data releases which could reverse this trend. There are support levels not far away, with the two clustered levels around 0.7150 looking most likely to hold up if reached.

It would be logical to look to sell reversals from swing highs on a short time frame chart in this pair today, but you may have better luck trading the two major currencies pairs which are seeing the USD in “blue sky”: long USD/JPY or short EUR/USD. 

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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