Rising from Support at $0.6250

Briefly traded at a new 2-year low.

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My previous signal on 4^th October produced a slightly profitable long trade from the bullish rejection of the support level which I had identified at $0.6517.

Today’s AUD/USD Signals

Risk 0.75%

Trades may only be entered before 5pm Tokyo time Thursday.

Short Trade Ideas

• Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of $0.6342 or $0.6380.
• 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 $0.6250, $0.6208, or $0.6166.
• 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 that the AUD/USD currency pair was showing very pivotal resistance at $0.6517 looked very pivotal, as did the support at $0.6393, for the best potential trade setups.

I was correct only in the sense that the price was barely able to get above $0.6517 a couple of times before making a significant fall over the next days.

The technical picture now is more bearish. We have seen the US Dollar resume its strong, long-term bullish trend in recent days as risk sentiment has soured again, and as a key risk barometer, we have seen the Australian Dollar trade as one of the weakest major currencies, helped partly by the undersized 0.25% rate hike implemented some days ago by the Reserve Bank of Australia.

A few hours ago we saw the price of this currency pair fall to another new 2-year low, trading below $0.6250 for the first time since the coronavirus panic of March 2020.

However, the support level confluent with this big quarter-number of $0.6250 has held and the price now seems to be rising firmly from there.

I suspect that this recovery will not last, so I will keep looking for short trades here, but not before the price rises further to make a bullish retracement reaching the nearest resistance level at $0.6342. I will enter a short trade if we get a bearish reversal at the first touch of this resistance level.

It is not likely that either of the US data releases due today will have a big impact upon the price, but tomorrow’s US CPI (inflation) data release definitely has the potential to move the price dramatically.

Concerning the USD, there will be a release of PPI data at 1:30pm London time followed by FOMC Meeting Minutes at 7pm. There is nothing of high importance scheduled today regarding the AUD.

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