RBA Rate Hike Spikes Price Upwards

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Today’s pivotal point is likely to be 0.7083.

My last signal from 27th April produced a profitable long trade from the bullish pin bar which rejected the support level I had identified at 0.7082.

Today’s AUD/USD Signals

Risk 0.75%

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

  • Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.7183.
  • 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 0.7082 or 0.7006.
  • 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 piece on this currency pair on 27th April that the price was still making lower lows and lower highs, which suggested the medium-term bearish trend was still in force.

Therefore, I was looking for a bearish reversal at 0.7235, which would present an attractive short trade entry point.

I was correct about the primary direction of the day, as the price fell over the day and reached as low as the support level which I had identified at 0.7082 shortly before the Tokyo close, but the price gave a nice short-term long trade from that level when it was reached, signalling its intention to move higher with a bullish pin bar on the hourly chart.

The price now is back where it was one week ago. The RBA just announced a 0.25% rate hike which some analysts had been expecting, but which surprised many who had been expecting a hike of only 0.15%. This caused a short-term bullish price spike of approximately 1%, but this quickly ended within 45 minutes, with the price retracing back to its consolidation area just above the nearest support level at 0.7082.

It seems clear that this support level at 0.7082 is going to be today’s pivotal point. The price is clearly within a long-term bearish trend, so the highest probability setup that might emerge today would probably be a short trade entry following the price getting established below 0.7082. This would likely trigger a further fall to the 0.7006 area which could be strong long-term support.

On the other hand, if 0.7082 holds as support, we will probably see the price rise over the short term.

AUD/USD

Regarding the USD, there will be a release of JOLTS Job Openings data at 3pm London time. There is nothing of high importance due today concerning the AUD.

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