In sticking with my anti-USD bias, I’m checking out AUD/USD this week for a potential long play if we see a pullback to recent support levels.
Will buyers hop into the bottom of the range on a pullback?
Support Retest on AUD/USD?
This week I’m checking out AUD/USD to add to my short USD bias, which I already have in play with my live short position in USD/JPY. The pair is likely to see some volatility this week as we’ve got potential catalysts coming from both Australia and the U.S.
From Australia, the monthly employment update will likely be a mover for the Aussie if we get a far deviation from the +100K net job adds expectation, and we’ve got data from Australia’s close trading partner, China, that could be an influence on broad risk sentiment as well as the Aussie.
From the U.S., we’ve got the latest reads on consumer inflation and consumer retail sales data to be the likely spark for USD volatility. The inflation read is likely to be the real mover between the two, and with expectations of inflation moving lower, we could see further pressure on the Greenback as traders will likely speculate more action from the Fed to get inflation going.
Overall, I think the broader trend higher in AUD/USD is likely to continue if we don’t see any major suprises, but with resistance holding off the bulls on AUD/USD just under 0.7250, a pullback might be due.
With that said, I’m looking to scale into a long position on a retest of the previous support area marked on the 1-hour chart above (roughly between 0.7065 – 0.7100. My stop will be below the next major psychological level of 0.7000, which has been a strong area of interest in the past. My initial target is above the recent swing highs at the next major psychological level for a solid potential return-on-risk for a swing trade. Here’s what I’m doing:
Long half position AUD/USD at 0.7105, max stop at 0.6975 with 0.50% risk, max target at 101.75.
Long half position AUD/USD at 0.7075, max stop at 0.6975 with 0.50% risk, max target at 101.75.
Again, I’ll be risking only 1.00% of my account to start with an initial rough 1.86:1 potential R:R. I may add to this position depending on what we see from this week’s data and news events. If the data and market reaction doesn’t play out as I hoped, then I may close the down the position/orders right away. If my orders are triggered by the end of the week, then I will close my orders ahead of the weekend.
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.
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