AUD downtrend trade idea

AUD/USD is in a textbook downtrend.

AUD
Source: Bloomberg

Rallies into $0.7300 to $0.7350 look like selling opportunities in my opinion, although with the FOMC meeting in play this week I would look at taking the USD out of the equation and playing the cross – see below.

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AUD/NZD has closed through the double top neckline at $1.1019 (see daily chart below) and the pattern has now completed. I would look at a small position shorting AUD/NZD at market, cutting back on a move through yesterday’s high of $1.1074.

The pattern, while still far from convincing (hence why I’d keep position sizing low) would target the $1.06 area. I would personally be taking some off the table into $1.07 – still a nice risk/reward ratio.

Glenn Stevens speaks on Thursday and could be a near-term catalyst for the trade. EUR/AUD longs also look quite compelling on a slight pullback, as does GBP/AUD.

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