Forex Overnight Preview-Trading Plan For The AUD/USD
Shain Vernier • 2 min read
It is not uncommon to see tight trading ranges and rotational market conditions across the majors on Monday morning. For today’s session, rangebound markets have been the rule. Sometimes muted action is a welcome break from the periodic turbulence of the forex. Updating the trading journal, planning and even taking the day off are not bad substitutes for staring intently at a quiet trading screen.
Rest assured, things won’t stay calm forever. Let’s take a look at the key events occurring in the U.S. overnight and pre-market hours:
Reserve Bank of Australia (RBA) Interest Rate Decision
Germany’s Industrial Production
U.S. Redbook Index
By far, the RBA announcements are the headliner of this group. Experts are projecting rates to be held steady at 1.5%. If there is a surprise, then volatility facing the AUD/USD will be on full display.
The AUD/USD has been in a pronounced downtrend for over two months. Last week’s trading range was a tight one, with volume gravitating towards .7675.
AUD/USD, Daily Chart
Here are the key levels moving forward:
Resistance(1): 38% retracement of current wave, .7728
Resistance(2): 20 Day EMA, .7741
Resistance(3): Bollinger MP, .7759
Support(1): Swing Low, .7624
Support(2): 38% yearly retracement, .7628
Bottom Line: The AUD/USD is exhibiting sideways price action on the daily timeframe between two support and resistance levels. However, price is poised to move directionally as a result of the coming RBA news release.
Currently, the market is waiting to see what the RBA does. I am partial to the AUD/USD breaking to the bear under last week’s low of .7638. Using the high of today’s closing range as the initial stop, a short under the swing low (.7624) from .7623 is capable of providing a position yield of 100 pips.
If this trade goes live, be sure to check back for management tips for limiting risk and maximising the upside potential of the open position.