Expectations are running high for Trump’s tax reform announcement this week, and I think this might lead to a breakout for AUD/USD’s short-term triangle. Take a look!
AUD/USD Trade Setup
As I’ve shown y’all in my Comdoll Trading Kit this week, AUD/USD has formed lower highs and found support at the .7500 major psychological level, creating a descending triangle formation. Price is currently testing the triangle resistance but seems to be bouncing off the ceiling and gearing up for another test of support.
Further consolidation could be possible but with this week’s set of catalysts from both the U.S. and the Land Down Under, I’m thinking that a breakout is bound to take place. For one, Australia will print its quarterly CPI on Wednesday’s Asian session and forex junkies are counting on a stronger read of 0.6% and maybe even an upside surprise.
Soon after, U.S. President Trump is scheduled to make his big announcement on tax reform, possibly reviving the U.S. stock market rally and gains for the Greenback. However, there’s also a pretty good chance that this event could be another letdown as traders are desperate to hear more details and confirmation that tax reform could be passed before the end of the year.
I’m not feeling confident enough to anticipate any moves so I’ll just wait for the markets to show me which direction this pair might take before I hop in. Zooming out to the longer-term charts shows that AUD/USD is still stuck in a range, with support at the .7200 area and resistance around .7750 which could serve as my targets in either direction.
For now, I’ve got my AUD/NZD short in play, along with a bearish NZD/USD setup that basically makes me net AUD/USD short already, so I’ll be thinking extra carefully before taking on another similar position. Don’t forget to check out our risk disclosure if you’re trading this one, too!
See also: Q1 2017 Trading Performance Review
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