AUD Weakens Creating Two Nice Bearish Setups

Overnight, AUD received a heavy blow from the fundamental side of the trading floor.
Tomasz Wiśniewski
Closeup of Australian Dollar and American US Dollar

There is a market rumor that apparently, RBA will lower interest rates in July and August (both 25bps). This was obviously perceived as a piece of negative information and AUD dropped like a rock almost on every pair. Thanks to this, we do have two interesting setups with this currency.

First one is the AUDJPY, where until yesterday, everything was looking great. We were in the ascending triangle pattern and the bullish flag, which was promoting an upswing. The price even broke the upper line of the flag but that breakout happened to be a fake one! After midnight, AUDJPY went down breaking the lower line of the triangle. That is an invitation to open a mid-term short position.

Another setup can be found on the AUDUSD, where recently, the price created a few nice trading patterns. First one was a small H&S formation, which started the most recent drop. After this, we got a descending triangle, which resulted in a further downswing. This allowed creating a right shoulder of the much bigger H&S formation. As for now, we are on the important support – a neckline but we see big chances for a bearish breakout here.

Last but not least is the CADJPY, where the price broke three important mid-term supports – two dynamic and a horizontal one. Today, we used the two of them as fresh resistances and the price created the shooting star candles. That creates a great bearish opportunity. The sell signal will be denied when the price will come back above the orange area.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis

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