Bullish trendline break, but strong resistance ahead at $0.6534. Strategies for both long and short trades amid key economic events.

My previous signal last Monday produced a profitable long trade from the bullish bounce at the support level of $0.6480.

Today’s AUD/USD Signals

• Risk 0.75%
• Trades must be entered before 5pm Tokyo time Thursday.

(Click on image to enlarge)

Short Trade Ideas

• Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of $0.6534, $0.6559, or $0.6590.
• 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.

Long Trade Ideas

• Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of $0.6488, $0.6480, or $0.6456.
• Place 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.

AUD/USD Analysis

I wrote in my previous forecast last Monday that the AUD/USD currency pair that we could see a good long entry from a bounce at $0.6488. This was a relatively good call as the productive bounce happened just a few pips lower and the next support level of $0.6480.

The most interesting technical change since Monday is the bullish break of the descending trend line which is shown within the price chart above. However, the structure of the resistance levels and the price action suggests that if this bullish break holds, it is likely to produce a slow and choppy climb instead of a strong, quick rise.

The nearby resistance level at $0.6534 looks strong, so bulls might want to wait for the price to get established above that level before entering any new long trade here. A good rule might two consecutive higher hourly closes above $0.6534 as a signal.

The Australian GDP data released earlier today was no surprise, but there will be a key event in the USA today with Fed Chair Powell testifying before Congress. This could produce a movement in the US Dollar without respect to any technical factors, so traders should be aware of that.

There is nothing of high importance due today regarding the AUD. Concerning the USD, there will be a release of the ADP Non-Farm Employment Change forecast at 1:15pm London time followed by Feb Chair Powell’s testimony to Congress and JOLTS Job Openings data at 3pm.

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