AUD/USD Signal Today – 31/01: Aussie Inflation Drop Impact

A few hours ago, lower than expected Australian inflation data was released, showing the annualized rate has fallen from 4.1% to 3.4%.

My previous signal on 18^th January triggered a profitable long trade when the price got established above the resistance level at $0.6568.

• Risk 0.75%
• Trades may only be taken prior to 5pm Tokyo time Thursday.

• Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of $0.6620, $0.6634, or $0.6737.
• Put the stop loss 1 pip above the local swing high.
• Adjust the stop loss to break even once the trade is 20 pips in profit.
• Take off 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to run.

• Long entry following a bullish price action reversal on the 1H1 time frame H1H1H1 time frame immediately upon the next touch of $0.6528 or $0.6456.
• Put stop loss 1 pip below the local swing low.
• Adjust the stop loss to break even once the trade is 20 pips in profit.
• Take off 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to run.

The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.

I wrote in my previous forecast almost two weeks ago that the AUD/USD currency pair was looking pivotal at $0.6568.

If we had gotten two consecutive higher hourly closes above $0.6568, I thought that a long trade could be a good trade entry. This was a good call as this level was pivotal – once the price got established above it later in the day, the price continued to rise from there, giving a chance for a profitable long trade entry.

The technical picture has changed since then. The price has spent two weeks now consolidating between $0.6528 and $0.6622. This consolidation may finally end later today as the US Federal Reserve releases a statement after its policy meeting, which could trigger a breakout by a directionless US Dollar.

Until then, and maybe even afterwards if the Statement says little, the best course of action here is to play reversals at the extremes, so I think the best approach today will be to look for a long trade from a bullish bounce at $0.6528 or a short trade from a bearish reversal at $0.6622.

A few hours ago, lower than expected Australian inflation data was released, showing the annualized rate has fallen from 4.1% to 3.4%. This has weakened the Australian Dollar but did not push the price below the nearest support level at $0.6528, suggesting that this data was not so impactful.

Regarding the USD, there will be a release of the ADP Non-Farm Employment Change Forecast at 1:15pm London time, followed by Employment Cost Index data 15 minutes later, and then the Federal Funds Rate and the FOMC Statement at 7pm. There is nothing of high importance scheduled today concerning the AUD.

Ready to trade our daily Forex signals? Check out this list of the best Forex brokers in Australia.