AUD/USD has been quite bullish in the last two months, climbing more than 15 cents during this time, as risk sentiment improved after major central banks and governments decided to throw the kitchen sink at the economy. Besides that, China got over the coronavirus pandemic without much trouble, which is positive for the AUD.

But, the climb ended below the 100 SMA (green) on the weekly chart at 0.70 for this pair last week and it has been pulling back nearly 300 pips lower. The price formed a big doji candlestick on the H1 chart on Wednesday last week, which was a reversing signal and AUD/USD turned bearish.

Thee pressure has been on the downside since then, as the USD gains strength after being really bearish for a few weeks. The price slipped below moving averages and they turned into resistance. Earlier today we saw this pair retrace more than 60 pips higher, but the 20 SMA (grey) seems to be providing resistance now and the price has formed an upside-down hammer, which is a bearish reversing signal. So, we decided to go short on this pair, since the pullback seems complete now.