Here we are back again at AUD/USD. Last month we had quite a few sell signals in this forex pair because the Aussie did badly for most of April and AUD/USD followed the downtrend.
It seems that trading for this pair will follow a similar pattern in May as well because nothing has changed fundamentally. So, we just opened another sell forex signal.
The downtrend is steep seeing as this pair has lost about 150 pips over the last two days. Although this works both ways – strong moves in one direction are generally followed by a strong retracement in the other direction.
But in this case, the retracement already happened. In early European trading, we saw a pullback take place with the price retracing to 0.74 from around 0.6970.
Right at 0.70, the price met the 20 SMA on the H1 forex chart, which was providing resistance. That was another technical indicator telling us to sell.
The H1 chart was overbought. Last night the next leg of the downtrend started when this indicator reached the overbought area. It´s likely to do the same today.
The 20 SMA is providing resistance again
We could have sold NZD/USD, but this pair has started a small uptrend since last evening, with lows getting higher and highs getting higher as well. This is while AUD/USD is making lower lows and lower highs.
That means that the downtrend is still intact for this pair. The chances of the downtrend continuing are a lot higher than in NZD/USD, hence the sell AUD/USD signal. Let´s hope we close the week with a few green signals.
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