Short on NZD/USD as Commodity Dollars Complete a Retrace Overnight
Commodity currencies have been trending down in the last two months. The downtrend hasn’t been that steep, but it’s been a downtrend nonetheless. The US Dollar has been trading sideways during this period as we can judge from EUR/USD and GBP/USD, so the weakness in commodity Dollar pairs hasn’t come from the USD side.
Although, last night they made quite a reversal. USD/CAD reversed down from the top at around 1.2940s and it has lost nearly 80 pips so far. NZD/USD and AUD/USD are about 60 pips higher as well.
The pullback up is almost over
But, if we switch to higher timeframe charts, let’s say the H4 chart, we can see that this reverse is more of a retrace of the bigger downtrend. As you can see from the NZD/USD chart, this pair has retraced higher and it is finding resistance at the 100 SMAs.
The 100 simple (green) and smooth (red) are providing resistance and the stochastic indicator is almost overbought. This means that the retrace is almost complete, so we decided to go short now. We just opened a sell forex signal on this pair.
The Euro and the GBP are reversing down now, so let’s hope that commodity Dollars turn back down as well. We could have waited until this pair reached the ascending trend line, but the moving averages are not letting the sellers push higher, so we just went short here.
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