The Australian Dollar is very weak but is unlikely to lose much more value against the US Dollar today.
My previous signal on 12rd January was not triggered as there were no valid reversals at the first touches of any of the support or resistance levels which were reached that day.
Today’s AUD/USD Signals
Risk 0.75%
Trades must be taken prior to 5pm Tokyo time Friday.
Short Trade Ideas
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of $0.6953 or $0.6993.
- 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
- Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of $0.6845, $0.6790, $0.6723.
- 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 that the AUD/USD currency pair was caught between $0.6845 and $0.6953, but that if new US CPI data showed a fall to 6.5% or even lower, we would almost certainly see a rise to test $0.6953 and potentially a bullish breakout beyond that level which could be significant.
This was a good call, as the CPI data came in at 6.5% and the price immediately rose beyond $0.6953, and then after falling back rose again to exceed that level over the next days.
The price reached a multi-month high yesterday at $0.7063 and then dropped like a stone. This bearish breakdown is strong and may be significant.
The price chart below shows the price is back in an area of comfort, the recent area of consolidation below the resistance level at $0.6918. The technical outlook is bearish as long as the price remains below that level, but how much further the price can fall is an open question as we have a lot of consolidation and support above the support level at $0.6845, which will probably hold the price up, at least for a while.
The Australian Dollar is in focus right now as it is the weakest major currency. This fall does not seem to be due to anything going on in Australia, but is more of a barometer of risk sentiment which took a fall yesterday for reasons which are very debatable. In my opinion, we are seeing more of a natural, deep bearish retracement.
As we have a long-term trend against the US Dollar, and as there is probably not a lot of immediate downside movement ahead of us, I see the best potential opportunity here today as a long trade following a bullish bounce at the support level of $0.6845, if it is reached today.
There is nothing of high importance scheduled today regarding either the AUD or the USD.
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