AUD/USD shows weakness, support at $0.6480-$0.6488 critical. Focus on long trades from this zone with a watchful eye on bearish momentum and key economic releases.
My previous signal last Thursday was not triggered, as there was no bullish price action when any of the support levels were first reached.
- Risk 0.75%
- Trades must be taken before 5pm Tokyo time Friday.
- Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of $0.6561, $0.6577, or $0.6590.
- Put 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 entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of $0.6488, $0.6480, or $0.6456.
- Put 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.
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I wrote in my previous forecast one week ago that the AUD/USD currency pair was looking more bullish for all risky assets such as the Australian Dollar.
I thought that the key resistance level at $0.6633 was very likely to be today’s pivotal point, and I thought bulls would overcome this level. I was correct about the first part but wrong about the second expectation.
The technical picture has become considerably more bearish over the past week, with renewed strength in the US Dollar, although this is a bit muted.
The price has fallen over recent hours to trade at a three-week low price.
The Australian Dollar is showing relative weakness, which can make it attractive to short. However, the price is now trading in an area which has acted as major support a couple of times during February and March.
I therefore think the best odds for a potentially profitable opportunity will be in looking for a long trade from this $0.6488 – $0.6480 area and hoping to hold in for a couple of hundred pips approximately.
The question of when to enter such a long trade will be resolved when the bullish price action reasserts itself from this zone. This currency pair can turn very quickly so it may not be necessary to wait too long, even a significant higher low with increased volatility on a short-term chart like the 15-minute chart could be appropriate.
Of course, a long trade in the face of strong bearish momentum is speculative, but the potential reward to the risk can justify it.
There is nothing of high importance due today regarding the AUD as it is a public holiday. Concerning the USD, there will be releases of US Final GDP at 12:30pm and US Pending Home Sales and Revised UoM Consumer Sentiment at 2pm London time.
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