- Risk 0.25%
- Trades must be entered before 5pm Tokyo time Wednesday.
Short Trade Ideas
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of $0.7100, $0.7200, or $0.7300.
- 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.
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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 $0.7045, $0.7004, or $0.6947.
- 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 last Tuesday, I wrote that we were more likely to see a rise over the day than anything else.
The major move of the day was upwards, but the end result was a consolidation.
The picture is looking more bullish now, with the Australian Dollar outperforming every other major currency over both the long and short time. The US Dollar has regained a bit of strength but remain within a long-term bearish trend. The Fed is on a path of rate cuts, albeit a slow one, while the RBA just hiked rates, so there are good fundamental reasons to look to the long side here.
Technically, we see the price breaking to a new 3-year high but failing to hold. However, the bearish retracement is mild, so there is still reason to look for a long trade from a significant bounce.
I will be very comfortable taking a long trade today from a bullish bounce at a key support level.
There is nothing of high importance scheduled today concerning the AUD. Regarding the USD, there will be a release of Retail Sales data at 1:30pm London time today.
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