Timeframe: W1 Recommendation: Long Position
Entry Level: Long Position @ 0.8775
Hedge Level: Sell Stop Order @ 0.8700 (Take Profit Level @ 0.8625)
Take Profit Zone: 0.9575 – 0.9625
Stop Loss Level: 0.8675 (We will not use a stop loss order to close this trade for a loss and execute this trade as advised below). We do use stop loss orders to protect our profits and close a trade for a profit. Each trader may decide if and where they would like to place the order.
The AUDUSD has corrected as visible in this weekly chart (W1). This currency pair is now trading at descending support levels as marked by the dark blue line in the above chart. We expect the AUDUSD to stabilize at current levels and rally back up to its resistance level which is marked by the light red box in the above chart.
MACD has formed a positive divergence which is a very bullish signal as momentum has improved while price action has drifted lower. RSI has formed a positive divergence as well and is currently trading in oversold territory. A breakout from this condition should power the rally.
We recommend a long position at 0.8775 with a potential second entry level at 0.9625. We also recommend a sell stop order at 0.8700 with a take profit target of 0.8625 in order to hedge our long position and before adding new long positions to this forex trade.
Traders who wish to exit this currency trade at a loss are advised to place their stop loss order at 0.8675. We will not use a stop loss order and execute this trade as recommended. Place your take profit order at 0.9575.
Here are the reasons why we call the AUDUSD currency pair higher:
- The AUDUSD currency pair is trading at descending support levels
- MACD has formed a falling wedge formation which is a bullish signal
- RSI has formed a falling wedge formation and is trading in oversold territory
- Profit taking in order to realize trading profits which will start a short-covering rally
- New long positions by institutional swing traders
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