Hello Forex traders,
Today the focus is on the CAD and AUD currency pairs. However before we start make sure to check out yesterday’s posts such as:
The “Loonie” has been trending up for quite a while – see the blue channel on the weekly chart here below. But the angle was relatively shallow – at least until recently.
Price action started to speed up and price eventually broke the upper line of the trend channel and managed to break out of the uptrend channel to the upside. Price also managed to break above break major resistance / tops (red horizontal lines) at the same time. Price did so with lots of momentum as well due to its strong bullish candles.
When reviewing the Fib levels it is clear that price has made a small pause at the -27.2% Fibonacci target and the next target could be the -61.8% Fibonacci target at +/- 1.1430.
With a strong momentum in play price usually uses the 38.2% Fibonacci retracement level to continue with its trend. Price has hit that level, which caused a daily bar to close with a decent wick at the bottom.
Also price has used the broken top of the uptrend channel (blue) as a support level. This has the makings of a classical break – pullback – continue scenario unfolding.
Conclusion: the CAD weakness trend seems to be back in full swing.
The 4 hour chart is showing a correction (magenta lines) within a steeper up channel (green). Such scenarios usually offer interesting break out situations.
In this case the break above the top magenta line and red resistance line offers a potentially great break out trade which is with the bigger daily and weekly momentum (green arrows).
The EURAUD weekly chart is showing recent bearish price action within a strong uptrend. The broken resistance (red) has turned into support (green) for the 2nd time? Will this level hold and provide a bounce or will the currency pair break?
4 HR CHART
The recent bounce off of the support caused price to make an upside retracement (orange channel), but the 4 hour down trend continued at the top of the 4 hour down trend channel (blue).
For the moment – although price has bounced at a major weekly support level (green) – there is no confirming evidence of such a continuation on the 4 hour chart.
Bulls will need to wait for a break above the down trend channel before they are able to take an (early) with the trend break out trade.
Bears are able to find smaller time frame short opportunities but they should be cautious of the major support levels such as the weekly bottom (green) and the Fibs (green) and trend line support (purple).
For the moment it is not clear whether, when and where the Aussie weakness trend continuation could continue so it is good to keep an eye out on both sides of the story and trade setups.
How do you view the CAD and AUD? Let us know down below!
Thanks for reading and sharing and wish you Good Trading!
Winner’s Edge Trading, as seen on: