SIGNAL FOREX

AUD/USD Forex Signal: Price Very Bearish – DailyForex.com


The pair is reaching a new 7-month low price.

Last Thursday’s AUD/USD signals were not triggered, as there was no bullish price action when the support level at 0.7430 was reached that day.

Today’s AUD/USD Signals

Risk 0.75%

Trades must be entered prior to 5pm Tokyo time Wednesday.

  • Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.7351, 0.7367, 0.7403, or 0.7424.

  • 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 H1 time frame immediately upon the next touch of 0.7299, 0.7264, or 0.7245.

  • 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.

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 Thursday that the technical picture was dominated by a narrowing triangle formation which was squeezing the price. I thought that a bearish breakdown looked more likely than a bullish breakout, due to the wider shape and position of the triangle.

This was a good call, as we got the bearish breakdown from the narrowing triangle as can be seen in the price chart below, although the break below 0.7400 which I was seeking did not happen that day so unfortunately a short trade entry signal was not triggered.

The picture is very bearish as the price has continued to fall ever since and is now reaching new 7-month low prices. Markets are seeing a big selloff in stocks and other risky assets and there are few currencies “riskier” than the Australian dollar, which analysts believe may require a new increase in tapering from the RBA. The global nervousness over the potential economic disruption which may be caused by a resurgent and partially vaccine-proof coronavirus variant is causing strong selling and a flow into the USD, and while this environment persists, we will be very likely to see still lower prices here over the coming days.

It is always dangerous to try to “catch a falling knife” when the price is travelling through blue sky as is the case here. For this reason, I will only look for a short trade today in this currency pair, from a bearish reversal at an identified resistance level.

AUD/USD

Concerning the AUD, there will be a release of retail sales data at 2:30am London time. There is nothing of high importance concerning the USD scheduled today.

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