AUDUSD - Tuesday squeeze play

We stressed the importance of waiting for the Chinese market before shorting the next down-wave on the AUDUSD.

On Tuesday, the Shanghai Composite closed 3% higher and also the Hang Seng ended up closing positive. Those profits "boosted" risk currencies such as the AUD and the NZD.

A look at the AUD shows the short squeeze on the AUDUSD. Price went all the way, squeezing both resistance areas above current price. Traders who entered prematurely either saw their stop hit or were under major pressure. We can't say it often enough: don't short the Aussie if China closes higher.

Current price action is still bearish. The squeeze shows that sellers were able to drive price back down below support. The Shanghai Composite is currently down -0.54%, but it's still early in China.