AUD/USD Facing A Big Test at the 20 Weekly SMA

AUD/USD has been bearish since early last year, when it was trading at around 0.80. It fell below 0.62 early last month as the sentiment was quite negative, but it made a swift reversal back then, forming a bullish engulfing candlestick which is a bullish signal and the price has been increasing since then.

In the previous week, AUD/USD reached the 20 SMA (gray) on the weekly chart, but retraced back down after a rejection there and formed an upside-down hammer which is a bearish reversing signal. Although, there was no followthrough as the USD turned weaker again last week after the US manufacturing PMI fell in contraction and the FOMC minutes sounded less hawkish, which improved the sentiment for commodity dollars and hurt the USD.

AUD/USD Weekly Chart – The 20 SMA Holding As Resistance for Now

A bearish reversing pattern has formed on the weekly timeframe

As a result, this pair closed another bullish week, but buyers couldn’t push above the 20 SMA once again and last night the price opened with a 30 pip bearish gap. Although the FED is pivoting and will slow down with rate hikes soon, as the minutes from the last meeting showed, which came before the US manufacturing and services PMI reports, which were pretty bad.

FED members were confident they could raise rates in smaller, more deliberate steps as the economy adapted to more expensive credit, according to the minutes of the early November FOMC meeting. This means that the US Dollar will continue to retreat lower for some time. So, we might see a push above the 200 weekly SMA soon.

AUD/USD Live Chart

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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