AUD/USD is trading near the highs for the day just above 0.7100
The pair formed a bit of a double bottom at yesterday's lows just under 0.7060 and has since moved higher as equities sentiment continues to recover. Wall Street began yesterday's trading in the doldrums but then pared most of those losses into the close and that felt like a win for stocks and risk - which is translating to the improved sentiment today.
For AUD/USD, the pair has continued to track higher on the new day and now looks to hold a break above the 100-hour MA (red line) @ 0.7102. In doing so, near-term price bias will turn neutral but more importantly it will put an end to the near-term bearish bias.
However, for the pair to continue to move to the upside there's still plenty of work to be done. The next key test will be the 200-hour MA (blue line) followed by further resistance at around 0.7150 where the pair has struggled to stay above last week.
But how is the overall picture looking for the pair?
As mentioned before, as we move closer towards 0.7000, it makes for an attractive proposition for shorts to get some money off the table and yesterday's price action continues to suggest that. With positioning still heavily stretched, we may see the same rinse and repeat happen until there is a catalyst for price to break below 0.7000 or a real squeeze to be had.
But unless price action is suggestive to hold a break above the September high of 0.7315, any recovery in the pair will be just another rally that sellers will sell into.
