The AUDUSD plunged into its support area, marked in light blue in the above H4 chart, after failing to rally into its resistance area which is visible in light grey. The Bollinger Band indicator has plunged together with price action as the lower band is now trading below the support area. This currency pair is trading between the lower band and the middle band, but the AUDUSD did move higher from its most recent lows.
This currency pair is may trend sideways near its support area which could invite forex traders to realize floating trading profits by closing existing short positions. The expected short-covering rally could lead the AUDUSD above its middle Bollinger Band from where new net long positions are expected to enter the trade. The rally has the potential to take price action into its resistance area over the next few trading sessions.
Forex traders are recommended to enter long positions at 0.7050 and below this level in order to take advantage 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 0.7385 has been set for a potential trading profit of 315 pips on the H4 Chart. More buy orders are expected after the AUDUSF completes its breakout above the middle Bollinger Band.
Forex traders should protect this trade with a stop loss level at 0.6900 for a potential trading loss of 150 pips which will result in a Risk-Reward (RR) ratio of 2.23.
AUDUSD
Long @ 0.7050
TP @ 0.7385
SL @ 0.6900
RR: 2.23
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