Rising Australian unemployment may weaken the Aussie.
My signal last Tuesday was not triggered as none of the key levels I had identified were reached that day.
Risk 0.75%
Trades must be taken prior to 5pm Tokyo time Friday.
- Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of $0.6672 or $0.6705.
- 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 $0.6620, $0.6593, or $0.6553.
- Put 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.
I wrote in my previous forecast last Tuesday that the AUD/USD currency pair had a more bearish technical picture with the price most likely to move down, but I thought there may be minor support levels at $0.6675 and $0.6665.
I was correct in seeing the day as likely to be a down day, and these levels which I was concerned about slowed, but did not halt, the move down.
The technical picture now remains bearish, mainly because the USD is continuing to make strong advances against its long-term bearish trend, which is beginning to be called into question. However, the Australian Dollar is also a bit weak, and this is reinforced by Australian unemployment data released earlier today which showed a surprise increase from 3.5% to 3.7%. This may make the RBA less likely to hike rates again, and this in turn weakens the AUD.
The biggest item of technical interest here is the support level at $0.6620 – if the price breaks down below this level and stays there, that will be a bearish sign which could trigger a sharper decline. Alternatively, it could act again as long-term support and provide a good long trade entry trigger. Therefore, my strategy here today is to wait for that level to be reached. A bullish bounce is a good long trade signal, but two consecutive hourly closes below $0.6620, especially if the second one is below $0.6600, could be a great new short trade entry.
Regarding the USD, there will be a release of Unemployment Claims data at 1:30pm London time. There is nothing of high importance scheduled today regarding the AUD.
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