AUDUSD. Few sell signals at once
|Today we have something interesting for the trend followers on one of the major pairs on the Forex market – AUDUSD. The trend here since the March is bearish. The price is making lower highs and lows and we can assume that this sentiment will be continued. What is more, we believe that we are just witnessing the price making the local top, which is a good time to enter the market with a short position.
What are the signs promoting the further downswing? First of all, the trend mentioned before, especially that we are touching the down trendline (red) as we speak. What s more, we are under a very important resistance, which was a support in March and April (green area). In addition to that, the price is now making a flag (blue lines), which is a trend continuation pattern and promotes a further downswing. Last but not least, we do have a potential correction equality pattern (~133 pips) with this one seen in April. All that together creates a nice opportunity to sell. If you do not feel it right now, maybe you could wait for an additional confirmation and a breakout of the lower line of the flag, which would significantly increase the chances for a downswing.
Our base scenario here is a further drop. Our view will be denied once the price will come back above the green area (0.748). We are close to that so this position has additionally a nice risk to reward ratio (relatively close stop loss and potentially large profit).
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