AUD/USD Reverses Down After Forming a Bearish Reversing Pattern on the H1 Chart

[[AUD/USD]] turned pretty bullish in the third week of this month, after US and China agreed on a partial trade deal, called “Phase One”, which will be followed by “Phase Two”and “Phase Three” if things go well. The Aussie benefited from the improvement in the risk sentiment in financial markets, as a risk currency.

But, last week this pair retreated lower and moving averages which were acting as support on the way up, turned into resistance, most notably the 20 SMA (grey) and the 50 SMA (yellow). Yesterday, the price started retracing higher and we decided to open a sell forex signal at the 50 SMA on the H1 chart.

The climb continued today as well, taking AUD/USD higher, but this pair formed a bearish reversing pattern earlier this morning and the price has reversed down now. We saw the price form two doji/upside-down hammer candlesticks at the top which are reversing signals. The stochastic was overbought as well, so the reversing chart setup was complete.

The price reversed down eventually, but has formed a bullish reversing pattern now. The previous H1 candlestick formed a pin above the 20 SMA and the actual one looks like a hammer. The stochastic indicator is nearly oversold now and the 20 SMA (grey) is providing support, so there’s a case here for a bullish reversal. Whether buyers will take control again now remains to be seen, but the chart setup now points up.