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My last signal on 18th May was not triggered as there was no bullish price action when the support level identified at $0.6620 was first reached.
Risk 0.75%
Tradesmay only be entered before 5pm Tokyo time Thursday.
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of $0.6553 or $0.6586.
- Place 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.
- Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of $0.6486, $0.6438, or $0.6387.
- Place stop loss 1 pip below the local swing low.
- 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.
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 that the AUD/USD currency pair had a bearish technical picture with the price most likely to move down, with the support level at $0.6620 looking pivotal. I was ready to enter a new short trade if we got two consecutive lower hourly closes below that price, especially if the round number at $0.6620 was breached.
Fortunately, although the price did break down, my criteria for a short trade entry did not set up, which was just as well as the $0.6600 area held, and the price rose again later.
The technical picture is now more bearish, with the price falling to a new 6-month low following the surprise increase in annualized Australian inflation that has just been announced. Although this makes higher rates more likely, the Aussie is being hit by worsening Chinese economic data and stock markets, and we also see a strong US Dollar – these factors are driving down the price.
Despite this bearish picture, the price may be finding some support now at $0.6486 but going long here without a very convincing bullish price action reversal, will be risking catching a falling knife.
I think the bearish situation here is likely to continue for a while, so I would look for a short trade from a bearish reversal following a retracement to a resistance level, notably $0.6553 which is confluent with the half number at $0.6550.
Regarding the USD, there will be a release of JOLTS Jon Openings data at 3pm London time. There is nothing of high importance scheduled today regarding the AUD.
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