My previous AUD/USD signal on 29th April was not triggered as unfortunately the low of the day was just a couple of pips above the support level I had identified at $0.7100.
Today’s AUD/USD Signals
Risk 0.25%
Trades must be taken before 5pm Tokyo time Wednesday.
Short Trade Ideas
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of $0.7175, $0.7189, or $0.7200.
Put 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
Long entry following a bullish price action reversal on the 1H1 time frame H1H1H1 time frame immediately upon the next touch of $0.7136, $0.7100, or $0.7079.
Put the 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
In my previous AUD/USD forecast last Wednesday, I wrote that we had support and resistance levels which are quite evenly spaced, so it was hard to make a call. I thought that bulls might struggle to get above $0.7177. As it happened, it was just a mostly bearish day, with the price falling almost all the way to the round number and support at $0.7100.
The technical picture now looks uncertain – there is a short-term bearish trend driven mainly by US Dollar strength as Iran and the USA enter a minor military naval confrontation in the Strait of Hormuz. This has tended to strengthen risk-off sentiment which typically sends the US Dollar higher and the Australian Dollar lower.
Another development is the RBA’s rate hike and minor hawkish tilt earlier today. This has firmed the Aussie against most currencies but has not had much effect against a strengthening US Dollar.
Despite the short-term bearish trend, zooming out shows that the price has not really been going anywhere over the past several days, although the AUD is relatively strong and the price here remains near the recent 3.5-year high.
I think the best bet today, if you want to trade this currency pair, is to look for reversals from extreme support or resistance levels. I don’t see what could change the ranging environment in the near future unless there is some surprise breakthrough between the USA and Iran, or a return to full war. Neither looks like, but I think a return to full war would be a more likely outcome over the near term.
A long from a bounce at $0.7100 or a short from a rejection of $0.7200 would be the best trades I could see setting up today. If taken, profit taking should be managed conservatively.
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There is nothing of high importance scheduled today concerning the AUD. Regarding the USD, there will be releases of ISM Services PMI and JOLTS Job Openings data at 3pm London time.
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