Trade of the Week: Long AUD/USD

Overview

This week's trading opportunity focuses on going long on the AUD/USD currency pair. The analysis is based on a technical breakout from an ascending triangle pattern, indicating a bullish trend.

Technical Analysis

The chart analysis reveals a breakout from an ascending triangle formation. The upper resistance line of the triangle is sloping downwards, while the lower support line is horizontal. The breakout above the resistance line suggests a potential upward movement in the AUD/USD pair.

Given the recent upward movement into the triangle, a similar upward move is anticipated following the breakout. The Australian dollar's correlation with gold prices, which are currently around $5000 per troy ounce, further supports the bullish outlook for AUD/USD.

Trade Setup

The recommended trade setup is to enter a long position on AUD/USD at approximately $0.6995. A stop-loss is suggested at $0.6895, positioned just below the recent low observed on Friday. The target for this trade is set at $0.7145, which aligns with previous highs noted in August 2022 and January 2023.

Previous Trading Outcome

In the previous week, a trade recommendation to go long on the DAX 40 index resulted in a minor loss. Despite an initial rally, the trade was stopped out just below the entry point. The analyst noted a challenging start to the year, with a current performance down by 3.6%. However, the strategy remains consistent, risking only 2% of capital per trade, which has historically led to positive annual returns.

Conclusion

This week's trade of the week is to go long on AUD/USD, capitalizing on the bullish breakout from the ascending triangle pattern. The entry point, stop-loss, and target levels are clearly defined to manage risk effectively.