AUD/USD Forex Signal: Aussie Falls as RBA Raises Bar for More Hikes

Technically, we have bearish momentum, although it is showing signs of fading. 

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My previous signal on 2nd November was not triggered, as none of the key support or resistance levels I had identified were reached that day.

Today’s AUD/USD Signals

Risk 0.75%

Trades may only be opened prior to 5pm Tokyo time Wednesday.

Short Trade Idea

  • Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of $0.6517.
  • 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 $0.6391, $0.6345, or $0.6299.
  • Place 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 Thursday that the AUD/USD currency pair was likely to continue rising over the day, and may well reach $0.6500, where it would likely sell off at least a little, and possibly make a deeper bearish retracement.

This was a reasonably good call, as although the price only rose for a few hours before pulling back a bit, it went on to reach the $0.6500 area the next day before falling back.

The technical picture has not changed much beyond making a firm bearish reversal at $0.6517 at the strong resistance level, which was given more impetus just a few hours ago as the Reserve Bank of Australia made a dovish tilt by raising its technical criteria to implement any further rate hikes within the current tightening cycle. This has made rate hikes less likely to happen in the near future and has pushed down the value of the Aussie. Meanwhile, the US Dollar has picked up a bid over recent hours, so this currency pair is in focus. We also see a decline in stocks and risk appetite, especially in Asia, over recent hours, and this has also helped drive the price down.

Technically, we have bearish momentum, although it is showing signs of fading. The price may have reached an area of comfort above $0.6400 where it is likely to consolidate over the short term. If this consolidation persists for a few hours, as there are no major news events scheduled today, we may see the opportunity for a long scalp trade from any bullish bounce at the nearest support level at $0.6391, especially if the bounce also quickly rejects the round number at $0.6400.

AUD/USD

There is nothing of high importance scheduled today regarding either the AUD or the USD.

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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.