AUD/USD Forex Signal: Lower Inflation Triggers Drop

May have found support above $0.6600.

My previous signal on 20^th June produced a profitable long trade from the bullish pin bar / doji which rejected the support level identified at $0.6756.

Risk 0.75%

Trades may 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 $0.6667, $0.6682, or $0.6708.
• 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 $0.6610, $0.6582, or $0.6560.
• 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 outlook, but this was in doubt as the level at $0.6757 had been firmly supportive for a while, so I thought a long trade there could be a good opportunity. This was a great call as we did get a bullish bounce at that level which provided a long trade entry that reached a reward-to-risk ratio greater than 1 to 1.

The picture here is dominated by the Australian Dollar right now following the release a few hours ago of lower-than-expected Australian inflation data – markets were expecting the annualized rate to fall to 6.1% but it fell beyond that, to 5.6%. This makes rate hikes less likely and so the Australian Dollar fell quite sharply, with the price of this currency pair reaching a new 3-week low price near $0.6600.

The price seems to have carved out a short-term bottom at $0.6618 a few hours ago, and it has risen weakly from this area, with the rise now seeming to run out of steam.

I think it makes sense, given the inflation data and the medium-term bearish trend, to look for a short trade entry here today, but only if the price reaches the area of likely resistance at $0.6667 and prints a firm bearish reversal there.

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

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