Commodity Dollars have been on a strong downtrend in the last 4 weeks or so. Although, they have made a decent pullback higher this week. The market sentiment has improved despite the starting date of the trade war getting closer.
It was the Aussie which was leading the way for commodity currencies higher in the first day of this pullback. Today, the Kiwi has taken the lead and that’s why I am not shorting NZD/USD. Instead, I went for AUD/USD.
The pullback seems exhausted for this forex pair at the moment. While NZD/USD has been making new highs today, AUD/USD hasn’t been able to make new highs. This sort of price action tells us that the pullback might be over soon and the downtrend will likely resume.
Although, the main indicator that I am basing this trade on is the 100 SMA (green). This moving average has been providing resistance to AUD/USD and it seems that the buyers are giving up at the 100 SMA. This moving average provided resistance yesterday and it did so today as well, so this looks like a nice bearish reversing chart setup.
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