My previous signal last Tuesday produced a profitable long trade from the bullish pin bar on the hourly price chart which rejected the support level identified at $0.6391.

Today’s AUD/USD Signals

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

(Click on image to enlarge)

Short Trade Ideas

• Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of $0.6456, $0.6480, or $0.6498.
• 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 Trade Ideas

• Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of $0.6391, $0.6345, or $0.6299.
• 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.

AUD/USD Analysis

I wrote in my previous forecast two days ago that the AUD/USD currency pair was looking more bearish after it fell to a new 5-month low price in the light of bad news concerning rates and inflation, and at higher tensions in the Middle East. I had thought that the price would reach the support level at $0.6391.

This was a good and accurate call.

After the price hit this support level, the US Dollar went on to finally begin weakening, and that process was given a boost by the G7 issuing an agreement stating that members can try to defend their currencies against the greenback. This was mostly for the benefit of Japan and South Korea, but it has given a tailwind to profit-taking from long USD positions and has helped risk sentiment a bit which has also pushed up the price a little here.

Despite this rise in price over recent hours, we see the bullish momentum stalling at what seems to be strong resistance at $0.6456. I think this level is likely to be pivotal today. We will probably either see a bullish breakout or a bearish reversal from this level, quite possibly at the New York open which often sees significant reversals.

I will be ready to take a short trade after the New York open if we see a firm rejection of $0.6456 at that time. Alternatively, a long trade could be a good idea if we get two consecutive higher hourly closes above $0.6456, provided that the price is still far away enough from the big round number at $0.6500 at that point to give an acceptable reward to risk ratio.

There is nothing of high importance due today regarding the AUD. Concerning the USD, there will be a release of Unemployment Claims data at 1:30pm.

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