AUD/USD had a rough session as the bulls initially pushed the pair higher after comments out of China that the Chinese may be interested in stepping into the fray of the European Union’s debt crisis and helping out. The Chinese have said this in the past, and no action has ever been taken. Because of this – that announcement had a very short shelf life in the markets.
The resulting shooting star is just below the recent consolidation area, and looks very weak. However, the daily candle from Tuesday was a hammer, so this suggests that we are about to see a real fight in this area overall. With this in mind, we are bulls overall in this pair, but are willing to step aside until we either get a nice pullback to the 1.05 or 1.04 level that shows support, or a break higher and above the recent highs at the 1.0825 area. Until then, we are very leery about getting involved in this pair.