The Forex market has reached a moment of interest to traders following yesterday’s US Treasury announcement that it will be supporting the long end of its bond market, which triggered a sharp fall in the US Dollar. Major currency pairs such as this one are already in medium to long-term trends against the USD, and the AUD/USD is no exception, although the Australian Dollar is not one of the stronger major currencies.
The problem with the Australian Dollar is that there was just an unexpected rise in the Australian Unemployment Rate, and this tends to be seen by analysts as making another rate hike by the Reserve Bank of Australia less likely over the near term. The knock-on effect is that the Aussie will likely be a little weaker than it otherwise would be, so the AUD/USD currency pair may not be the best currency to be long of against the USD for the rest of this week.
AUD/USD Technical Analysis
Turning to the technical side, despite the questions being asked of bulls, the price chart shows that although the bullish momentum can be seen to be running out of steam, the picture remains reasonably bullish. The price is currently consolidating but has been largely contained within an orderly linear regression analysis which fits the ascending price channel. We have a significant higher low above the round number at 0.7100, so it does look like we are going to see higher prices over the short term. There are no key resistance levels before 0.7153, so the price has room to rise. Finally, the very short-term price action at the time of writing looks bullish.
AUD/USD H1 Price Chart
The only bearish technical factor is that this is (so far) the third day in which the price has topped at about 0.7130, so there is some struggle to rise. Yet the action does suggest a breakout looks likely today.
The best opportunity today could be a long trade following a breakout to a new two-month high price above 0.7130 or following a retracement and bullish bounce rejecting 0.7100 / 0.7096.
Support & Resistance Levels
Risk 0.25%.
Trades may only be entered prior to 5pm Tokyo time Friday.
Short Trade Idea
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.7153.
Put 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.
Long Trade Ideas
Long entry following a bullish price action reversal on the 1H1 time frame H1H1H1 time frame immediately upon the next touch of $0.7096 or $0.7067.
Put the 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.
There is nothing further of high importance scheduled today concerning either the Australian Dollar or the US Dollar.
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