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The AUD cannot compete with USD strength.
My previous signal on 5th July was not triggered, as there was no bullish price action at either of the key support levels when they were first reached that day.
Today’s AUD/USD Signals
Risk 0.75%
Trades must be entered before 5pm Tokyo time Friday.
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.6797 or 0.6835.
- 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 0.6731 or 0.6683.
- Place 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
I wrote in my previous forecast on 5th July that the AUD/USD currency pair was in focus as it was reaching a pivotal technical point giving a potential short trade opportunity from a bearish reversal at either the descending trend line or the horizontal resistance level at 0.6915.
This was a good call but took a few days to play out, so it was not directly useful as a daily analysis.
The bearish, higher descending trend line I refer to above is still holding and still very relevant here. The price chart below shows that it needed a little adjusting but continues to contain the price. There is also a lower trend line but the price channel which is produced is not symmetrical and therefore doubtful – I would call this more of a large, long-term wedge pattern.
The US Dollar has continued to strengthen in line with its long-term trend, with the most proximate cause yesterday’s higher than expected 9.1% US inflation rate which has increased expectations of a higher forthcoming rate hike from the Federal Reserve. The Australian Dollar got a small boost a few hours ago from very strong employment data but is sinking again against the greenback.
We see short-term bearish momentum, within a long-term bearish trend, and the technical chart pattern which dominates is bearish. So, I would look for a short trade, but I do not see a set-up about to form. I would want to see the price pop back up to the 0.6800 area before looking for a bearish reversal to signal a short trade entry.
Concerning the USD, there will be a release of PPI at 1:30pm London time. There is nothing of importance scheduled today regarding the AUD.
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