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Rising Aussie tied to fragile risk recovery.
My last signal on 8th March produced a profitable short trade from the bearish doji candlestick which rejected the resistance level at $0.6624.
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 $0.6719, $0.6748, or $0.6786.
- 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 $0.6599 or $0.6553.
- Put the 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 might spike following Powell’s testimony so it could be wise to trade a reversal at any of the key support or resistance levels at that time.
This was a good call, as the reversal off the nearest resistance level did happen just after Powell’s testimony. However, this short trade only gave just a little over the minimum of 20 pips of profit, so it was not an especially good opportunity.
Over the past few days, we have seen a slow and weak rise in the price of this currency pair. This is because the usual dichotomy of risk on = stronger AUD, risk off = strong USD, has been disrupted due to the banking crisis in the US.
These conditions, as long as they continue, suggest that the price is quite likely to continue to consolidate within the fairly wide range in which there are no key support or resistance levels between $0.6719 and $0.6599.
This might be good news, as the price is not far from the resistance level at $0.6719, so a bearish reversal off that level should be a good opportunity to make a short trade entry.
Apart from this, as the price action is so choppy, there are likely to be better opportunities today elsewhere in the markets, rather than in this currency pair.
Regarding the USD, there will be releases of PPI data, Retail Sales Date, and the Empire State Manufacturing Index at 12:30pm London time. Concerning the AUD, there will be a release of Unemployment data at 12:30am.
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