Aussie Continuing to Rise After Shock

Weakly bullish above $0.6668.

My last signal on 31^st May was not triggered as there was no bullish price action when the support level identified at $0.6486 was first reached.

Risk 0.75%

Trades must be taken prior to 5pm Tokyo time Thursday.

• Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of $0.6705, $0.6748, or $0.6767.
• 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 $0.6668, $0.6638, or $0.6610.
• 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 that the AUD/USD currency pair was likely to continue with a bearish bias 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.

This was a good call insofar as the price continued to fall for the day’s London session and most of the New York session, before finding a bottom and taking off to the upside.

The technical picture now is considerably more bullish. This has been caused by some weakening in the US Dollar but has mostly been triggered by a recovery in risk sentiment, especially in Asia, which has boosted the Aussie, further magnified by the RBA’s surprise rate hike yesterday. The price has continued to rise and print new, higher support levels, but bulls may now be running out of steam. The line of least resistance continues to look upwards, as we have more support levels near the price than resistance levels.

I see the best approach here as trusting the short to medium-term bullish momentum and watching what happens at the support levels shown in the price below when they are reached. If the price remains above the nearest level at $0.6668, the situation still looks bullish, so a long trade from a bullish bounce at that level, or alternatively at the next level of $0.6638, look like they could be good trades. However, I would keep position size a bit small here.

There is nothing of high importance due today regarding either the AUD or the USD.

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