The AUDUSD has started to trend sideways inside of its support area which is marked in light blue in the above H4 chart. This follows a strong sell-off on the back of a strong US Dollar which enjoyed bullish momentum after the semi-annual congressional hearings of Janet Yellen, the US Fed Chair, which sounded more hawkish in regards to an increase in interest rates. The impacts of this have faded and the AUDUSD is set to rally from current levels.
The Bollinger Band indicator has confirmed the sideways trend; the lower band is trading below its support area and the upper band is trading above it while the middle band is trading inside of it. Forex trade may opt to realize floating trading profits and exit their short positions. This is expected to lead to a short-covering rally which will lift the AUDUSD back into its resistance area which is visible in light grey in the above chart.
Forex traders are recommended to take long positions at 0.7410 and below this level in order to be well positioned for the expected rally. Conservative forex traders should wait for a confirmed breakout above the upper band of it Bollinger Band Indicator before entering their long positions. A take profit target of 0.7750 has been set for a potential trading profit of 340 pips on the H4 Chart. More buy orders are expected after the AUDCAD completes its breakout above the upper Bollinger Band.
Forex traders should protect this trade with a stop loss level at 0.7340 for a potential trading loss of 70 pips which will result in a Risk-Reward (RR) ratio of 4.86.
Long @ 0.7410
TP @ 0.7750
SL @ 0.7340