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Thanks to fresh catalysts from the Fed, I’ve got a textbook rising trendline break on AUD/USD that looks ready to go for a trade.

Rising Low Break on AUD/USD

AUD/USD 4-Hour
AUD/USD 4-Hour

Big move for the Greenback in recent sessions, thanks to the Fed signaling to the market that another rate hike is still potentially alive for 2017, with more to come in 2018. Based on the spike, this took a lot of traders by surprise and that there could be potential for traders to reduce short USD positions or even start some fresh USD longs.

I’m going to try to ride this momentum and I’m doing it against AUD, which has had a rough patch that was likely due to metals weakness, China’s credit rating downgrade by S&P, and shaky commentary on the Aussie from the Reserve Bank of Australia.

Looking ahead, we have a slew of mixed tier economic reports next week from the U.S.  Unless we get a major surprise from the data or another geopolitical event, I don’t see anything going into the end of September that’s likely to break the momentum.

So, I will take that rising trendline break on the four hour chart for a short position as I think that could draw in more sellers. I’m going with my usual one weekly ATR stop to give the trade room to breathe, and my target will be the broken major resistance area highlight on the chart that had AUD/USD bulls frustrated between the Summer of 2016 and March of 2017 .  Here’s what I’m doing:

Short half position AUD/USD at  market (0.7928), max stop loss at 0.8105, target at 0.7750 for a little over 1:1 return-on-risk potential.

I’ll be risking only 0.5% of my account on this position and as usual, I’ll look to make adjustments if my first target is reached.

And before I go, I decided to close out my open short orders on EUR/GBP as the pair dropped like a rock without enough pullback for me to enter the trade…another missed move…Doh!

As always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.