AUD/USD Forex Signal: New Falling Price Channel

Adam Lemon

Resistance level at 0.7000 handle looks pivotal.

My previous signal on 2nd August was not triggered as there was no bullish price action when the price first reached the support level I had identified at 0.6913.

Today’s AUD/USD Signals

Risk 0.75%

Trades may only be taken prior to 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 0.6999 or 0.7063.
  • 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 0.6878 or 0.6797.
  • 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 2nd August that the AUD/USD currency pair was showing a mixed technical picture: a medium-term symetrical bullish price channel, but choppy and is bearish price action over the short-term.

I thought the best approach would be hoping for the price to continue falling to the support level at 0.6913, and to enter a long trade if there is a firm bullish bounce there.

This did not pay off but it would not have got anyone into trouble either.

The technical picture today is somewhat different. The price chart below shows that the flow of the price has moved from being contained within a bullish price channel into a new bearish price channel. What is especially interesting about this channel is that the upper trend line is quite confluent with a key resistance level which itself is confluent with a major round number at 0.7000. It is clear that a short from a bearish reversal at 0.7000 could be an interesting trade, especially as the price has a lot of room to fall, with no key support until 0.6878 is reached.

The major event of the month these days is the US inflation data due today, it is quite likely the release will trigger a meaningful spike in the price, so scalpers might find some pips fading these spikes at key levels if any set up. I will repeat, a short trade at 0.7000 looks potentially very interesting.

AUD/USD

Regarding the USD, there will be a release of US CPI data at 1:30pm London time. There is nothing of high importance scheduled today concerning the AUD.

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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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