Wednesday saw an eventful day for the Aussie, with the Asian and early European sessions showing bullish momentum and the pair reaching its highest price since early Feb. The pair’s early gains were quickly reversed in the U.S session with the daily candle closing as a bearish pin bar.
The market formed an almost perfect double top pattern at 1.0850 before rotating back lower and closing below resistance at the 1.0770 area.
The charts below show the strength of both resistance areas. The markets close below 1.0770 could prove to be a significant action leading to further losses in the coming days.
With the strong bearish price action signal suggesting continued selling we’ll be looking to short the pair reacting to Wednesdays price. Aiming to enter using a limit order at the 1.0770 (also a 38.2% fib retracement of the pin) area, we’ll place our stops at Wednesdays highs with 1.0600, (the next area of support), being an initial target.