My AUD/USD signal last Thursday was not triggered as none of the key support or resistance levels were reached that day.
Today’s AUD/USD Signals
Risk 0.75%
Trades must be taken before 5pm Tokyo time Thursday.
Short Trade Idea
- Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.7293.
- 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 Ideas
- Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 0.7207 or 0.7157.
- 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 Thursday the most likely outcome here was a continued choppy rise to 0.7250 if the new support level at 0.7157 held.
This was a pretty good call as that support has continued to hold and the price has continued to advance towards 0.7250, although this big quarter-number has not yet been reached.
The technical picture is weakly bullish, with the price printing a new higher support level at 0.7207. The AUD is strongly positively correlated with the NZD, and the RBNZ has just hiked its interest rate and signalled a more hawkish pace of future hikes, so the stronger NZD may be pulling up the AUD, reinforcing the bullish case here.
The problem for bulls is that volatility here, and in the Forex market generally, is very low, and the price is not far from 0.7250 which could prove to be very resistant. The AUD is also vulnerable to a shock which could see risk sentiment suddenly deteriorate, especially if Russia were to launch an invasion deep into Ukraine.
I think that if the price retraces to 0.7207 and bounces there, it will make a good long trade to 0.7250, but if the price hits 0.7250 first and stalls there, a short trade could be taken successfully. The problem is that volatility is very low, and the action is quite choppy, so any trades here will really need to be monitored on a short time frame.
There is nothing of high importance due today regarding either the AUD or the USD.