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Bearish Reversing Pattern in AUD/USD, As RBA Gives Dovish Signals

The bullish retrace seems complete for AUD/USD as the 50 daily SMA turns into resistance, while the RBA is slowing rate hikes

Skerdian Meta•Wednesday, November 9, 2022•2 min read
RBA is holding steady, not lowering rates anytime soon

AUD/USD turned bearish in April and it fell below the moving averages on the daily chart, turned into resistance immediately and they have been doing a great job keeping buyers under control, killing their hopes after every decent retrace higher. The 50 SMA (yellow) took its turn in September and it seems like this moving average is doing so again, as the price starts to reverse down today after the bullish momentum which started last Friday.

AUD/USD Daily Chart – The 50 SMA Rejecting the Price Again

The stochastic indicator is overbought and reversing down

Although yesterday the 50 SMA rejected the price and the daily candlestick closed as a doji, which is a bearish reversing signal after the bullish move. Today the sentiment has turned negative and stock markets opened lower after three strong days, so risk currencies such as commodity dollars are reversing lower as well. We opened a long term sell forex signal earlier here below the 50 SMA, so we’re bearish on this pair for the near future.

Remarks by RBA deputy governor, Michelle Bullock

  • Further rate hikes will be required
  • We have already raised rates aggressively
  • Size and timing of rate hikes will depend on the data
  • Inflation is too high, increasingly broad based
  • Good reasons to think we are approaching peak of inflation this cycle

Well, you gotta walk the walk and not just talk the talk. The latest RBA decision here to just increase the cash rate by 25 bps isn’t too convincing and hints that the central bank may be approaching the latter stages of its tightening cycle.

She mentions that the central bank could have a “scorched earth” rate policy to get inflation under control, but that it would not be the best outcome. In terms of their next steps, she maintains that they have flexibility as they “would raise rates faster if we thought inflation was not coming down as expected”. Right.

AUD/USD Live Chart

 

AUD/USD
ABOUT THE AUTHOR See More
Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

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