AUD/USD - trends and bends

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#1

Good afternoon (I’m in the UK). I hope everyone’s trading is going well and the new year is a happy one so far.

I thought I’d put up this thread as I’m intending to focus on this pair. Its a decent pair for long-term trading - spreads are narrow, margin is low, historic volatility is second-highest of the majors and high amongst the full 28 leading pairs, and ATR14 is not currently crazy high, 70 pips.

My bias for long-term trend-following is long, we’re in a clear uptrend.

For an uptrend I want to see only 3 criteria (all from the D1 chart) -

  • price above 50EMA
  • 20EMA above 50EMA
  • chart shows recent close above last swing high and no close below any swing low since last swing high

The location of price at the last close and the EMA’s is obvious. My last swing high was 13/12, and price closed above on 09/01. There was a swing low in between, 20/12, and there has obviously been no close below that low.

I note a couple more TA features which can be useful in ranking buy and sell entries. I’ll get to them as they come up.

Accordingly, trend-followers should be long. As more of the signals I use as entry points print on the EOD chart I will post them here and this will draw out their key points, where SL’s would be etc.

I’m not big on fundamentals but the latest on AUD is from last night - inflation up to 7.8%, previously 7.3%, forecast 7.5%.

Onwards and upwards.
Maybe.

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#2

My most recent buy signals on this pair were all three on 12/01 -

  1. close above swing high of 13/12
  2. close above inside day bar 11/01 and parent bar 10/01
  3. close above bullish fractal bar of 09/01

SL for No.1 the swing trade could be volatility-based, such as entry price minus 3 x ATR(14), about 200 pips.
SL for No.2 could be much tighter, the low of the ID formation parent bar, about 110 pips.
SL for No.3, the fractal trade, could be the base of the fractal pattern, i.e. the low of 06/01, but that would suggest a SL distance of about 250 pips. (contrary to what some people teach, a bullish fractal signal, with high middle bar, is not a reversal pattern)

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#3

New buy signal at tonight’s close - close above bullish fractal 18/01.

Notes:

  • This is the 4th consecutive higher close. It would be rare for a fifth to print tomorrow.
  • We have closed at 0.7107 with a daily high of 0.7123. We are approaching the 2022 high of 0.7662.

Good luck.

[edited to update closing price 25/01]

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#4

Thank you for sharing @tommor

Happy New Year and wish you all the best for 2023!

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#5

No significant changes in the situation 26/01. AUD/USD has further extended its upward move - 5 consecutive higher closes: this is not common in any year. A pull-back is now probable: this could last several days and be deep enough to print a daily close below the 20EMA.

The Fed announces its interest rate decision next week which could have significant meaning for traders in this pair. It will either end the pull-back or it won’t. I expect to be in cash before the Fed news. What I hope for then is the Fed news will be clearly very bullish or it will be clearly very bearish. Happy either way.

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#6

The close of Friday 27/01 was lower than Thursday.

(No surprise after 5 consecutive higher daily closes. A series like that happens only about 3 times per year. the probability of a 5th successive higher close after 4 successive higher closes is less than 10%.)

Friday also printed an an Inside Bar. The day’s low was above Thursday’s low. But the low got nowhere near the 20EMA. The week ended with only 3 weekly bars overlapping and not even the three wicks went low enough to touch the 20EMA.

These are the finger-prints of the most minor pull-back in a strong uptrend.

I intend now to hold until Monday’s close and review then. But keep your eyes on signs on the chart that anticipate Wednesday’s Fed news.

A couple of long entry points are presented by the Inside Bar formation and the lower Friday close but if you’re not long already, we’re too close to the Fed date.

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#7

Weds fed announcement s is pivotal, if interest rates are risen there could be a big sell off later in the week.There was positive data USD last week even though dollar was nt particular strong .

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#8

I think a continuation of the uptrend is more probable after Wednesday but the probability of surprise is high. Maybe enough to dramatically strengthen the USD and cause a deep retracement in this trend - price falling well below the 50EMA.

The lower risk option is get into cash and wait for the dust to clear.

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#9

Yes it at a strong resistance level now , I’m still short of the some trades . There was nt any commitment regarding announcement s on interest rates at the last fed, so indices and AUD dollar continued on the uptrend but all that can change

#10

Moved SL’s on long positions to Friday’s low.

#11

Today we’ve had a lower close and the day’s high and low printed below both Friday and Thursday’s high and low. My stop-losses cleared me out of long AUD/USD positions when we dropped below Friday’s low.

But several long entry points are now in sight.

If you’re very aggressive, go long now as this is the second consecutive lower close in an uptrend.
Less aggressive is to wait for a breach of today’s high.
Less aggressive again would be to wait for tomorrow’s close and if that is above today’s high, go long then.

I don’t recommend any of these as that would ignore the strong possible trend disruption the Fed might cause on Wednesday.

Another option might be using last Thursday’s bullish fractal and going long on either a breach of Thursday’s high or a close above Thursday’s high. Likewise, Thursday was also the mother bar of Friday’s Inside Bar, presenting the same entry options.

I am still holding off until after the Fed.

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#12

currently am in a sell position on this pair and intend to hold it until the second imbalance I see on the daily chart. I trade with price action/supply and demand and it looks like a pretty clear sell to me. not a long position

#13

If this drops heavily the profits could be dramatic. It probably won’t. But a short or a sell order below current price is a viable strategy, just a low probability one.

Good luck either way.

#14

with price action it is believed that price leads news so we shall see lol ill update!

#15

Looks like a very bullish hammer candlestick today, or a decent bullish pin-bar - I don’t trade single candle formations like these but some bold traders will be getting long now.

#16

Maybe a small short-term bounce on the 1h. Testing AT’s scalping strategy on the 1hr right now.

#17

I’m going to bed right now. But you could sure be in and out with a profit before I wake up.
Good luck.

#18

I’ll keep you posted!

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#19

Got in at .7053 and up 30+ pips right now.

Any tips on managing an in profit trade other than moving SL up?

Maybe drop into a lower TF and if price goes the other way, close out some?

#20

Key things to look out for

  • on a weekly chart there are a lot of resistance levels between .709 (todays rate) and historical high of .74 / .75 (Mar 2022)
  • Daily RSI is fast approaching oversold as well.

think it will be choppy all the way to .74 / .75

maybe buy as small as possible, so you can have a large stop loss (70 pips) to overcome the choppiness and TP at .74.