AUD/USD has been in a downtrend since the start of the month when it rejected the major resistance level of 0.7440 and has shown a retracement to the 61.8 fibonacci level and since forming lower highs as shown using the inner trend line. It has respected the 20 moving average on the H1 which has acted as a dynamic resistance and subsequently we see price action falling to the downside, implying a bearish sentiment for this pair. We can also see a bearish hidden divergence on the H1 whilst using the awesome oscillator indicator and therefore can confirm a short bias on Aussie Dollar.
The target would be around 30 pips with the stop loss of 15 pips giving this pair an opportunity to retest the 61.8 fibonacci level once again to seek resistance before melting to the downside if that's the case. 0.7360 has shown to be an important support for AUD/USD and price action would surely struggle at this level, hence why i would place the target just above this, keeping this trade setup to a 30 pip target and then look to enter if it does break this support level.
I like this setup but I must admit to being a little apprehensive as looking at the RSI, you’ll see the final PA low on Friday is actually higher than the previous low on a Thursday morning. I too think this pair has room to drop but I’m not entirely convinced this will be it, yet at least
Shivam_93
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@TradingHarmony, You mean to say when using the RSI indicator there is no bearish hidden divergence?
UnknownUnicorn3317576
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@Shivam_93, I’m not a big fan of things are are seen to be ‘hidden’. This strikes me as people looking for something which isn’t there and then when the guess works, claiming the signal to be hidden. Please don’t take that as a criticism of you, simply the technique. Obviously, I’m also now writing this comment and seeing that the pair did in fact just spike up and take out the suggested SL so there’s also that :)
Shivam_93
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@TradingHarmony, Fair enough! There was a tight stop loss anyways, i will learn from this thanks. Have a look at my latest setup!