My previous signal last Monday was not triggered, as unfortunately the price never quite reached the resistance level which I had identified at 0.7038.
Today’s AUD/USD Signals
Risk 0.75%
Trades must be entered before 5pm Tokyo time Thursday.
Short Trade Ideas
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.6918 or 0.7002.
- 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
- Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 0.6848 or 0.6774.
- Place 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 in my previous forecast last Monday that the price had just hit the big round number at 0.7000 and make a bullish bounce there. I suggested not to have any faith in this low until the price got established above at least 0.7038 or ideally 0.7063.
This was a good call as the price action turned bearish again just below 0.7038 and we have seen another strong downwards leg in the bearish trend as risky assets such as the Australian Dollar have continued to get hammered, which the US Dollar has continued to power to a new multi-year high. I was correct to take a bearish outlook.
Looking at the price chart below, it can be seen we have had a bullish retracement from the 0.6850 area but zooming out it can be said that there is nothing unusual about this bullish movement – it is proportionate with the trend and seems to be just a bullish retracement. This is reinforced by the fact that the price is still respecting the resistance level I have drawn at 0.6918.
Despite all these reasons to be bearish, today is a big day with very major news due from the FOMC, and markets will be watching keenly to see whether the Fed hikes by 0.50% or 0.75%. On big days like today, you can get major counter-trend movements after the release and stop-hunting movements before the release. Therefore, it would not be surprising if we get at least a bit of an upwards movement if the price can get established above 0.6918. This could be an opportunity today for scalpers to exploit, but any long trade should be closely monitored.
I think the best opportunity here which may set up today would be a short trade following a pull-back if the FOMC announces a 0.75% rate hike.
Concerning the USD, there will be a release of Retail Sales data at 1:30pm London time, followed by the FOMC Federal Funds Rate, Statement, and Projections at 7pm. There is nothing of high importance scheduled today regarding the AUD.