AUD/USD rose on Wednesday as traders took on more risk due to hopes of a solution to the EU’s debt crisis. However, the pair has stopped as the first significant resistance area above the parity level. The daily candle is long and green, and certainly looks healthy, but the fact that it stopped at the first sign of strong resistance suggests that the underlying strength might be questioned over the short-term. We think that a pullback is very possible as a result, and wouldn’t want to take on new positions to the long side. On a shorter timeframe chart, we would be willing to sell on signs of exhaustion at this level, at least down to the parity area.
If we give the parity level back up, this pair will almost certainly continue its drive south, and we would be overly aggressive in our selling at that point as it would show real signs of negativity on all things risk-related in the markets.
Written by FX Empire