AUD/USD Forex Signal: Consolidation Continues


The pair is slightly more bullish, but AUD is no longer leading the reflation trade.

Last Tuesday’s AUD/USD signals were not triggered, as the reversals took place beyond both the nearest key support and resistance levels.

Today’s AUD/USD Signals

Risk 0.75%

Trades must be entered prior to 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 0.7683 or 0.7701.

  • 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 Trade Ideas

  • Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 0.7597, 0.7574, or 0.7531.

  • 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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AUD/USD Analysis

I wrote last Tuesday that as the price was clearly within a wide-ranging environment, the best approach would probably be to trading reversals at price extremes. Although my exact levels did not hold accurately enough to produce a trade entry signal, this was essentially a good call as the consolidation has continued.

I noted that we may be seeing a small bullish development with an “over and under” pattern forming. This pattern has formed and held and is supported by the level just below the round number 0.7600. However, the resistance at 0.7683 is also holding.

There is not much to say except that despite the advance by several major stock markets, the Aussie is no longer the strongest major currency against the dollar, and the wide-ranging consolidation pattern continues.

As the range looks strong, I will be happy to take a long trade from a bullish bounce at 0.7597 which looks likely to be the strongest key level on the chart. I am also ready to take a short trade if we get a bearish reversal at 0.7683 or 0.7701.

AUD/USD

Regarding the AUD, the RBA will be releasing the reults of its Financial Stability Review at 2:30am London time. There is nothing of high importance scheduled today concerning the USD.

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