AUD/USD Forex Signal: Choppy Consolidation Below 0.7000

The best opportunities are likely to be fading key levels.

My previous signal on 15th June was not triggered, as the bearish price action took place above both the nearby key resistance levels which I had identified.

Today’s AUD/USD Signals

Risk 0.75%

Trades may only be taken prior to 5pm Tokyo time Tuesday.

Short Trade Ideas

  • Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.6999 or 0.7038.
  • 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 0.6848 or 0.6774.
  • 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 in my previous forecast on 15th June that it would not be surprising if we got at least a bit of an upwards movement if the price could get established above 0.6918. I was looking for a short trade following a pull-back if the FOMC announced a 0.75% rate hike.

This was a good call, as the major movement was upwards and it did take off after 0.6918 was breached, giving much more profit than I had expected. However, the FOMC did then later announce a 0.75% rate hike which brought the price back down, as I had expected.

The technical picture has stagnated – we now have a fairly wide and choppy consolidation pattern playing out between the very big round number at 0.7000 which is acting as resistance, and the nearest support level at 0.6840. This is a lot of room for the price to move with any safe entry points, and as it is a quiet Monday, it is highly likely that neither of these levels will be reached today.

I think the best opportunity which could set up today would be a bearish reversal at 0.7000. I would be happy to take a short trade if that happens.

In the unlikely event that the price can get established above 0.7000 later, that would be a bullish sign and signify that the US Dollar is ready for a bigger selloff. Risk sentiment is improving, and if it continues to do so, we could see it expressed strongly in this currency pair which tends to rise and fall along with global risk sentiment.

AUD/USD

There is nothing of high importance 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.

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