A while ago we opened a forex signal in AUD/USD. We were out of forex signals after the climb in EUR/USD this morning when we had a sell signal, which got smoked. At least we´re free from burdens now, so we decided to take this trade in AUD/USD.
The 50 SMA has been breached but not broken
Why AUD/USD?
AUD/USD has been trading in an uptrend over the last four days and we know that the trend is our friend, so there´s no arguing with that.
Besides that, the 50 SMA (yellow) on the hourly forex chart has been providing support over the last few days and it is doing the same now. We already mentioned this moving average in the comments section for that signal.
The stochastic indicator is also oversold, which means that the retrace lower has run its course.
Why AUD/USD and not NZD/USD?
If you compare the hourly charts of both pairs, you can see the difference of the past few days. While the uptrend in AUD/USD is still intact since the lows are getting higher, in NZD/USD the lows have been getting lower yesterday and today.
That means that the uptrend in this forex pair might be over and a reverse or a decent pullback lower is likely to follow.
This is how we analyze forex pairs and forex trades from a purely technical point of view. There are 3-4 main technical indicators which are pointing up, so we can form our opinion. Then we compare it with another similar pair like NZD/USD to see if this other pair offers better odds. In this case, it doesn’t, so we stick to AUD/USD.
NZD/USD on the other hand has broken all moving averages
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