Selling AUD/USD at Previous Support
Skerdian Meta • 1 min read
AUD/USD has been trading on a straightforward downtrend since the beginning of the year. We saw a decent pullback in the second half of last month as observed on the daily and H4 charts, but that retrace ended by the end of last month and since then, the picture has been quite bearish for AUD/USD.
Although, another retrace has been taking place in the last several trading days. But, this retrace looks much weaker than the previous retraces. So, we’ve decided to sell AUD/USD since the retrace looks complete on the H1 and H4 charts.
As you can see from the H4 chart above, this forex pair used to find solid support at the 0.7140 level. It has bounced off this area a few times during the way down and it seems like this level has now turned into resistance.
The 200 SMA has now reached the price
Switching to the H1 chart, we see that the stochastic indicator is overbought here, which means that the retrace up is compete on this time-frame chart. Besides that, the 200 SMA (purple) has just reached the price now and it should add some more strength to the support area which has now turned into resistance.
So we decided to go short on this pair hoping that the weakness period will be over soon for the USD. Now we wait for AUD/USD sellers to return and make this pair resume the bearish trend. The stop is obviously above the moving average.