AUD/USD Daily Price Forecast – 14th January 2025

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Trade Summary:

AUDUSD
Sell Stop @ 0.61785
TP @ 0.61564
SL @ 0.62200

Detailed Analysis for AUDUSD:

1. Overview of the Trade Setup:

• Instrument: AUD/USD (H4 timeframe)

• Sell Stop Level: 0.61785

• Stop Loss (SL): 0.62200

• Take Profit (TP): 0.61564

This trade setup is based on a bearish momentum confirmation, with the price positioned near a key resistance level and showing signs of a potential downward continuation.

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2. Key Technical Indicators:

• Momentum Power:

  • The momentum power is slightly negative (-0.00012025), indicating weak bearish sentiment. This suggests that sellers are gradually gaining control, but confirmation is needed.

• Price Action:

  • The price is close to the 0.61800 round level, which is a significant psychological level. A break below this level would confirm bearish momentum.

  • The candlestick patterns show rejection of higher prices, with sellers stepping in near the resistance zone.

• Moving Averages:

  • The price is trading below the 200-period moving average (green line), which indicates a bearish trend.

  • The moving average is sloping downward, further confirming the bearish bias.

• Support and Resistance Levels:

  • Resistance: The resistance level at 0.62200 (SL) is well-placed above recent highs, allowing room for minor retracements.

  • Support: The support level at 0.61564 (TP) aligns with previous price action and a potential demand zone.

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3. Risk-to-Reward Ratio:

• Risk: The distance between the Sell Stop and the Stop Loss is 41.5 pips (0.62200 - 0.61785).

• Reward: The distance between the Sell Stop and the Take Profit is 22.1 pips (0.61785 - 0.61564).

• Risk-to-Reward Ratio: Approximately 1:0.53. While the risk-to-reward ratio is not ideal, the trade is valid due to strong bearish confirmation.

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4. Trade Justification:

• Bearish Momentum:

  • The negative momentum power and price action near the 0.61800 round level suggest a strong likelihood of a bearish breakout.

  • The candlestick confirmation aligns with the sell stop order.

• Trend Alignment:

  • The price is below the 200-period moving average, confirming a bearish trend.

  • The moving averages and price structure indicate that sellers are in control.

• Logical Stop Loss and Take Profit:

  • The Stop Loss is placed above the recent resistance level, allowing for minor retracements without invalidating the trade.

  • The Take Profit is placed at a logical support level, ensuring a realistic target.

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5. Potential Risks:

• False Breakout: If the price fails to sustain below 0.61785, the trade could be invalidated.

• Market Volatility: Sudden news or events could cause unexpected price movements.

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6. Summary of the Trade Setup:

• Sell Stop: 0.61785 (below key support level to confirm bearish momentum).

• Stop Loss (SL): 0.62200 (above recent resistance to allow for retracements).

• Take Profit (TP): 0.61564 (at a logical support level).

This trade setup aligns with the bearish trend and momentum, offering a high-probability opportunity to profit from a continuation of the downward move. However, the risk-to-reward ratio should be carefully considered before execution.

Recommendation: Proceed with the trade setup but consider adjusting the Stop Loss or Take Profit levels to improve the risk-reward ratio if market conditions change.

Recommended Lot Size

Trading is all about statistics.

While we can experience winning streaks, we can also suffer from losing streaks.

As such, we should always size each trade to withstand losing streaks (if any).

It's widely recommended that you should not risk more than 2% of your capital for each trade.

We believe it's easier to control your lot size by limiting your lot sizing to 0.01 for every $500 in your account.

So if you have $5000, then risk no more than 0.10 lot size per trade.

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If you spot a mistake especially when it comes to the price, please use common sense and check the chart.

We wish you good luck and good profit for this trade idea.

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