AUD/USD Continues to Move Toward Parity

The move up through the 1.000 level is important if for nothing more than psychological reasons. It is not unusual for a market to make a couple of runs to this price level before moving through. The AUD/USD uptrend is strong, and I would continue to look for short-term buys as long as the pair remains above the .95405 low noted on the chart.

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This uptrend has been relentless and unforgiving to any who attempt to fade it. Still, with the daily relative strength index (RSI) finally crossing back below 70 and the market having finally reached parity, any additional upside beyond these major psychological barriers should be limited, with the greater risk for a material pullback.

The other week, we said that aggressive players could short at 1.0000, and the trade has since paid off quite well. Despite the relative strength, the market has also now officially ended a sequence of eight consecutive weekly positive closes to provide additional warning signals for a major bearish reversal. As such, we look for any additional rallies to be well capped on a close basis ahead of the 1.0000 figure.