AUD/USD Forex Signal: Double-Top Pattern Points To Strong Sell-Off

The AUD/USD pair formed a double-top pattern at 0.6675 between November and December. Its neckline was at 0.6570, the lowest point on November 30th.  Bearish view

 Bullish view

The Australian dollar continued its downtrend on Wednesday after the latest interest rate decision by the Reserve Bank of Australia (RBA). The AUD/USD exchange rate tumbled to a low of 0.6545, its lowest point since November 23rd. RBA rate pauseThe AUD/USD price has been in a steep sell-off after peaking at 0.6690 on Friday. This retreat started after the Federal Reserve chair warned that the Federal Reserve could still hike interest rates in the coming months. He was pushing back against the overall view by market participants about rate cuts.The pair’s sell-off continued after the relatively mixed economic data from the United States. Data by the Institute of Supply Management (ISM) revealed that the country’s non-manufacturing PMI rose to 58.3 in November, higher than the median estimate of 58.0.A separate report revealed that the number of job vacancies in the US dropped sharply in October. They dropped to 8.733 million in October, down from 9.35 million in the previous month. These numbers came a few days ahead of the official non-farm payrolls (NFP) data by the labor department.These reports will be important because the Federal Reserve has maintained that it will be data-dependent when making its next decision. Stronger jobs numbers will raise the possibility of another rate hike.The AUD/USD pair retreated after the latest RBA decision. As was widely expected, the bank decided to leave interest rates unchanged at 4.35%. The committee also committed to continue its fight against inflation. The general view is that the RBA will maintain rates at the current level in the coming months.The Aussie also dropped after Moody’s lowered its outlook for China’s economy to negative citing high debt and slow economic growth. China is an important part for Australia because of the vast amount of goods it buys. AUD/USD technical analysisThe AUD/USD pair formed a double-top pattern at 0.6675 between November and December. Its neckline was at 0.6570, the lowest point on November 30th. The pair has dropped below the 23.6% Fibonacci Retracement level. At the same time, it has slipped below the 25-period and 50-period Arnaud Legoux Moving Averages (ALMA).The Relative Strength Index (RSI) is approaching the oversold level of 30 while the MACD has slipped below the neutral point. Therefore, the outlook for the pair is bearish, with the next point to watch being at 0.6480, the 50% retracement point. More By This Author:GBP/USD Analysis: Facing the Dollar’s RecoveryEUR/USD Forex Signal: Bears Prevail As It Flips Key Support LevelForex Today: RBA Holds Rates & Tilts Dovish