The AUDUSD has sold off from its resistance area, marked in light grey in the above H4 chart, and this currency pair broke down below its support area two times before being able to trade above its support area which is visible in light blue. Forex traders may opt to take this as a profit taking opportunity and close existing sell positions in order to realize floating trading profits which could further increase the recovery potential in the AUDUSD.
The Bollinger Band indicator has supported the sell-off and moved accordingly, but the lower band started to reverse and is now sloping to the upside below of its support area. The middle band has now reached the support area and is also expected to reverse while the upper band continues to move lower. Price action is trading between the lower band and the middle band, but shows signs for a potential breakout.
Forex traders are recommended to enter long positions at 0.7160 and below this level which will position them to profit from the expected short-covering rally. Conservative forex traders should wait for a breakout above the middle band of it Bollinger Band indicator before entering their long positions. A take profit target of 0.7430 has been set for a potential trading profit of 270 pips on the H4 Chart. More buy orders are expected after the AUDUSD completes its breakout above the middle Bollinger Band.
Forex traders should protect this trade with a stop loss level at 0.7070 for a potential trading loss of 90 pips which will result in a Risk-Reward (RR) ratio of 3.00.
Long @ 0.7160
TP @ 0.7430
SL @ 0.7070