3 Bullish Signals on AUD/USD – No Trade!

Trade Cancelled: 2012-10-24 1:25

Looks like three wasn’t a charm for the Aussie bulls!

The Aussie bears continued their party in the AUD/USD chart yesterday as they dragged the pair below the trend line and Fib retracement areas and invalidated the bullish divergence that we spotted. Heck, the pair even reached the 1.0250 minor psychological level!

As it turned out, the Aussie bears were just too hungry yesterday when expectations of weak U.S. corporate earnings, weak euro zone data, and a surprise credit rating downgrade for five Spanish regions weighed heavily on risk appetite.

AUD/USD Broken Trend Line

Good thing that I decided to wait for candlestick confirmation and positive comdoll data! Thanks to Dr. Pipslow‘s advice about focusing on the process, I waited for fundamentals to confirm my technical play. And since the bleeding of the high-yielding currencies didn’t stop during the U.S. session, I decided that my trade idea was invalidated.

But now that AUD/USD is back above 1.0300 thanks to a positive Chinese manufacturing PMI, should I think of going long again? It’s still in the middle of the week after all!

Maybe you have another trade idea or two to share? Hope you’re having a good trading week!

Trade Idea: 2012-10-23 6:45

I’m looking at AUD/USD again this week and hoping that I’ll be able to score another win with this pair. Take a look at these bullish signals I’m seeing on AUD/USD’s chart:

AUD/USD Trade Idea

First up, there’s a rising trend line on the 4-hour chart and it appears that AUD/USD is sitting right on this support area at the moment. In fact, the pair is currently waiting just below the 1.0300 major psychological handle, which is close to its week open price.

Next, I’m seeing a break-and-retest situation for this pair as it just pulled back to the 61.8% Fib. That area is in line with a former resistance level and what appears to be the neckline of the inverse head and shoulders which was broken last week.

Last but certainly not least, there’s a bullish divergence as stochastic made lower lows while the pair made higher lows. Stochastic is currently making its way out of the oversold zone, suggesting that bulls might be in control soon.

As for fundamentals, well, that’s the part I’m not too sure about. Risk has been off for the past couple of days as the U.S. earnings reports are churning out bleak figures and we didn’t see any progress from the EU Summit over the weekend. However, we’ve got a couple of top-tier reports that could boost AUD/USD for tomorrow’s Asian session.

Australia is set to release its CPI figure for Q3 2012 and we might see a climb from 0.5% to 0.9% during the period. Another report that could lift the Aussie’s spirits is the Chinese HSBC flash manufacturing PMI for October, which just might land back above the 50.0 mark. If that’s the case, an Aussie rally might be in the cards as stronger manufacturing prospects in China could result in higher demand for Australian products.

Here’s my game plan:

Long AUD/USD at the trend line area, stop loss below the bottom daily ATR (around 1.0275), profit target at 1.0400.

I’ll wait for reversal candlesticks around the 1.0300 mark before entering this trade. If those don’t materialize during the U.S. session, I’ll set my orders prior to the release of the Australian and Chinese data early in the Asian session.

I’ll be risking only 0.5% of my account on this event play and you’re free to join me after you check out our risk disclosure!

Do you think I’ll be able to catch some pips with this setup? Don’t hesitate to share your two cents!

Happy time

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4 comments

  1. Invicta

    Interesting how we see these charts so differently. At 8:45 am UK I went short at 1.0293 on a break of the H4 fractal and took my money off the table after 20 pips. Shame I had to go out otherwise I would have stayed in longer. If price continues south I see 1.0200 as the next target. However a close above 1.0304 would make me consider following you to the long side. What happened to you? Presumably you got stopped out for about 10 pips and are looking for a re-entry?

    Reply
    • Happy Piphappypip Post author

      Nah. I didn’t see reversal candlesticks during the US session nor was the pair around my buy area prior to the release of the Australian and Chinese data so I considered this setup invalidated.

      Reply
  2. Guest

    Interesting how we see these charts so differently. At 8:45 am UK I went short at 1.0293 on a break of the H4 fractal and took my money off the table after 20 pips. Shame I had to go out otherwise I would have stayed in longer. If price continues south I see 1.0200 as the next target. However a close above 1.0304 would make me consider following you to the long side. What happened to you? Presumably you got stopped out for about 10 pips and are looking for a re-entry?

    Reply

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