The Aussie is likely to decline against strong US Dollar.
My last signal from 5th April was not triggered, as there was no suitable price action when each of the support and resistance levels which I had identified were first reached.
Today’s AUD/USD Signals
Trades may only be entered 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 0.7493, 0.7523, 0.7557, or 0.7588.
- Place 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 0.7569, 0.7548, or 0.7536.
- 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 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.
I wrote in my previous piece on this currency pair on 5th April that the technical picture had become much more bullish, with the price breaking upwards very strongly on high volatility immediately after the RBA’s Rate Statement was released, to trade at a new 9-month high price.
I thought that the market was ripe for day traders to trade long on shorter time frames, and that the price might go all the way to the next resistance level at 0.7636, or even 0.7650.
This was a good and call, as the price continued to advance over the day even beyond 0.7650.
However, after reaching a new 9-month high at 0.7661, the price reversed strongly and fell quickly back into its former consolidation zone and has been looking weak ever since.
The technical picture got somewhat more bearish as we now see the price look weakly bearish while consolidating below the resistance level confluent with the big round number at 0.7500.
The AUD does not look particularly weak, but if it trades downwards without breaking above 0.7500 to make new lows below 0.7400, it could plunge quickly as low as the next support level at 0.7321. The band of several resistance levels not far above the current price suggests the line of least resistance will certainly be downwards, so the most potential is likely to be on the short side over the near term.
The RBNZ’s strong rate hike of 0.50% a few hours ago might have been expected to boost the values of the AUD and the highly positively correlated NZD, but the hike has had little effect, which is arguably a bearish sign.
I am ready to take a short trade from a firm bearish reversal off 0.7493, especially if the 0.7500 price is touched as part of the rejection.
Concerning the USD, there will be a release of PPI data at 1:30pm London time. Regarding the AUD, there will be a release of Unemployment data at 2:30am.