The AUDUSD has rallied after hitting multi-week lows and formed a rising wedge formation as visible in this H4 chart. The bearish chart pattern has been strong and not been violated. We expect this currency pair to correct down to its ascending support level and potentially initiate a breakdown into its ascending 50 DMA with the next support level being at its 200 DMA.
MACD has confirmed the bearish chart pattern and formed a negative divergence. RSI has confirmed the bearish chart formation as well with a negative divergence of its own while it trade in and out of extreme overbought territory. A breakdown from overbought territory should accelerate the sell-off.
We recommend a short position at 1.0465 which will be an addition to our existing short position we took on March 5th at 1.0225. Our existing long position we took on January 24th at 1.0491 will act as a hedge to our two short positions.
Traders who wish to exit this trade at a loss are advised to place their stop loss level at 1.0500. We will not set a stop loss level for this trade and execute it as recommended. Place your take profit level at 1.0330.
Here is why we call this currency pair lower
- AUDUSD form rising wedge formation and trades at the top range
- MACD confirmed bearish chart pattern with formation of a negative divergence
- RSI confirmed bearish chart pattern with formation of negative divergence
- RSI trades in and out of extreme overbought and overbought territory
- Profit taking after decent Bull Run from multi-week lows
Open your PaxForex trading account today and add this trade to your portfolio.