NZD/USD or AUD/USD? We made the Right Decision Last Night
Skerdian Meta • 1 min read
Last night I was trying to make a decision whether to buy AUD/USD or NZD/USD. They were both declining throughout the day, so that was a bit of a counter-trend trade, but the market sentiment has been going against the USD recently, so we saw it as a retrace lower before the next move up.
This morning, I woke up to see NZD/USD hit the take profit target, forming a perfect bullish chart setup. On the other hand, AUD/USD has continued lower.
This bullish chart setup worked like clockwork today
So, we made the right decision, but it wasn’t that easy because these two forex pairs are quite correlated and behave in a similar manner. Although, there were a few clues which signaled us to go with the Kiwi rather than with the Aussie. Here they are:
- The 100 SMA providing support on the H4 NZD/USD chart
- The pin candlesticks just above the 100 SMA
- The price action
The first two indicators are very visible, while the price action is a bit more difficult to understand. One of the main signs that the NZD was more reliable to buy according to price action was the fact that the retrace here started yesterday, while in AUD/USD it started the day before, on Monday.
On Monday, the USD was really under pressure, so the AUD should have closed the day with lots of gains, like all other major currencies. But, it closed the day lower which was a sign of AUD weakness. So, that was one of the main reasons we bought AUD/USD and we’re happy to have picked this forex pair to go long. Now, on to the next trade.