AUD/USD – Bounce Higher Could be in the Cards

AUD/USD (0.7206)

Some points to consider in this Forex market:

• There is a bullish engulfing candlestick hinting to an Australian Dollar recovery.
• Waiting on a short AUD sale to come along. The upcoming RBA rate decision will be a key event risk.
• Trade strategy: Stand aside

The AUD/USD Forex market has put in a bullish engulfing candlestick, visible on the below AUD/USD daily MT 4 chart. This suggests a bounce higher for the Australian Dollar could be in the cards. However, follow through is a bit murky with the pending Reserve Bank of Australia (RBA) policy decision looming in the days ahead. This event risk will threaten any meaningful technical positioning. Thus warning traders to be patient.

Technical Analysis

Let’s now look at today’s daily AUD/USD technical analysis. There is a former support, now resistance level lining up at 0.72. A daily close above this technical resistance level challenges a cluster area starting from the Oct. 12 high at 0.7382 to 0.7388. The alternative AUD/USD technical analysis, should the Australian Dollar move lower, notes technical support lining up at the rising trend line from September. This technical level is at 0.7078. A break below this technical level challenges the next technical support located at 0.6901.

Trade Strategy

Now, let’s discuss today’s AUD/USD trade strategy. Looking at my charts, the dominant Australian Dollar trend is bearish. Taking this into account, I will treat any gains as corrective and opening the door to a possible short trade as it will favor a larger decline. For now, I will wait on the sidelines, especially with the looming RBA policy decision, for a better trade opportunity to come along. For today, I am flat in the AUD/USD Forex market.