AUD/USD Forex Signal: Long-Term Bearish Wedge Dominates

The AUD cannot compete with USD strength.

My previous signal on 5^th July was not triggered, as there was no bullish price action at either of the key support levels when they were first reached that day.

Today’s AUD/USD Signals

Risk 0.75%

Trades must be entered before 5pm Tokyo time Friday.

• Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.6797 or 0.6835.
• 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 0.6731 or 0.6683.
• 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.

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AUD/USD Analysis

I wrote in my previous forecast on 5^th July that the AUD/USD currency pair was in focus as it was reaching a pivotal technical point giving a potential short trade opportunity from a bearish reversal at either the descending trend line or the horizontal resistance level at 0.6915.

This was a good call but took a few days to play out, so it was not directly useful as a daily analysis.

The bearish, higher descending trend line I refer to above is still holding and still very relevant here. The price chart below shows that it needed a little adjusting but continues to contain the price. There is also a lower trend line but the price channel which is produced is not symmetrical and therefore doubtful – I would call this more of a large, long-term wedge pattern.

The US Dollar has continued to strengthen in line with its long-term trend, with the most proximate cause yesterday’s higher than expected 9.1% US inflation rate which has increased expectations of a higher forthcoming rate hike from the Federal Reserve. The Australian Dollar got a small boost a few hours ago from very strong employment data but is sinking again against the greenback.

We see short-term bearish momentum, within a long-term bearish trend, and the technical chart pattern which dominates is bearish. So, I would look for a short trade, but I do not see a set-up about to form. I would want to see the price pop back up to the 0.6800 area before looking for a bearish reversal to signal a short trade entry.

Concerning the USD, there will be a release of PPI at 1:30pm London time. There is nothing of importance scheduled today regarding the AUD.

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