My previous AUD/USD signal on 15th January was not triggered.
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Today’s AUD/USD Signals
- Risk 0.25%
- Trades must be entered prior to 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 $0.7030, $0,7072, or $0.7090.
- Place 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 1H1 time frame H1H1H1 time frame immediately upon the next touch of $0.6980, $0.6949, or $0.6901.
- Place 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
In my previous AUD/USD forecast almost two weeks ago, I wrote that the price was currently experiencing a flat consolidation within a bullish trend, so a long trade from a bounce off the support level at $0.6661 probably would have been a smart move.
I also thought that a bullish breakout beyond $0.6760 would be a bullish sign and might be another event which could be used as a long trade entry trigger.
Unfortunately, neither of these setups were triggered that day, but the strong rise over the past two weeks has shown I was correct to look to the long side here.
The technical picture is a recent strong rise, with the price having just reached a major round number at $0.7000 which is starting to act as resistance. I am not saying there will be a major reversal here, but the price is quite likely to consolidate in this area ahead of the US Federal Reserve policy meeting later today. Any change to rates is out of the question.
Fundamentally, we are seeing a strong selloff in the US Dollar, and relative strength in the Aussie.
For the greenback, it is probably to do with large funds moving out of the US Dollar as the world loses trust in the US as a safe haven given the dramatic policies which have started coming from the Trump administration. The greenback is in a long-term downwards trend and it is starting to really take off, and it is hard to see what could change that soon. Just a few hours ago, President Trump confirmed he couldn’t care less if the Dollar continued to fall.
For the Aussie, we just saw inflation data come in materially higher than expected, rising on an annualized basis from 3.4% to 3.8% unexpectedly. The Reserve Bank of Australia is now the only major central bank that has a realistic prospect of making a rate hike, which is likely to prop up the Aussie.
For these reasons, I prefer to take only long trades here, either from a bounce at any of the above-mentioned support levels or following a sustained bullish breakout above $0.7030. The breakout scenario is very unlikely to happen before the Fed’s release later.