THE AUD/USD pulled back to significant levels and found support, but failed to break 0.7300 on the back of poor Australian GDP numbers confirming the expecting recession.

AUD/USD 4 hour chart  shows significant support providing a bullish candle at key level 0.7300 and 50 EMA, suggesting there could be more upside to come.

Key Points:

  • 4 Hour time frame – Price above the 200 EMA
  • 4 Hour time frame – Price sound support and above the 50 EMA
  • 4 Hour time frame – RSI breaks above midline – 50
  • 4 Hour time frame – Bullish Hammer found at 38.2% Fibonacci
  • Found support at Fibonacci 38.2% (20th August low to 1st September high range)
  • Price holding above Fibonacci 32.8% of prior major range
  • 1-hour time frame – Crossed daily trend line
  • 1-hour time frame – Price breaking trend line
  • 1-hour time frame – Price below 50 EMA and must cross and hold.
  • 1-hour time frame – Above 200 EMA

Key Levels:

Support – 0.7300, 50 EMA

Resistance – 0.73907, 0.7400, 0.74200 – 1 Hour time 50 EMA

Entry Zone:

Optimal entry provides the greatest reward to risk ratio while supporting entry is a zone for reversal signals.

Optimal Entry – 0.73250

Supporting Entry – 0.7333 – 0.7380

Candle Reversals for entry

  • Bullish Hammer
  • Bullish Engulfing
  • Bullish Piercing

 

The Risk:

As traders, it is your job to mitigate the risk and only trade structures that provide high probability and great reward to risk ratios.

If you are not comfortable with defined exit levels, experiment with Moving Averages to help set solid exit rules to protect your capital.

 

IF: Price breaks below 0.7300 level and violates 200 EMA – this would suggest the structure is not in our favour and would be wise to reduce exposure or close the trade until a solid signal gives us reasons to re-enter.

 

Reward / Reward Targets:

Optimal Entry 0.73250 – Target 1 0.73907 = 2.1x Reward to Risk

Optimal Entry 0.73250 – Target 2 0.7400 = 3x Reward to Risk

Optimal Entry 0.73250 – Target 3 0.74200 = 4x Reward to Risk

 

Supporting Entry 0.7333 – Target 1 0.73907 = 1.5x Reward to Risk

Supporting Entry 0.7333 – Target 2 0.7400 = 2.2x Reward to Risk

Supporting Entry 0.7333 – Target 2 0.74200 = 3x Reward to Risk