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HomeForexForeign exchange Watchlist: Resistance Reversal on AUD/CAD?

Foreign exchange Watchlist: Resistance Reversal on AUD/CAD?


The present threat surroundings and a candy technical setup brings AUD/CAD again to the highest of our longer-term watchlist. Is the current rally accomplished and able to reverse?

AUD/CAD has been on our watchlist for a bit, going again to early February when it bottomed out across the 0.8900 deal with. We mentioned that the realm between the robust space of curiosity (round .9100) as much as the falling trendline is the realm to look at for a possible alternative to play the longer-term downtrend at higher costs, and it seems to be just like the market is lastly there after a pair extra weeks of Aussie energy.

AUD/CAD Daily Forex Chart

AUD/CAD Every day Foreign exchange Chart

On the day by day chart above, the market has principally retested the falling ‘highs’ sample and is at present within the means of forming a Night star sample (a triple candlestick sample the typically precedes a bearish reversal). This may increasingly attract technical merchants into the longer-term downtrend because the potential risk-to-reward is far more favorable at these ranges.

Utilizing a decent cease above the falling trendline/earlier swing excessive and concentrating on the earlier swing low offers a possible return vary of round 1.50:1 or extra.  And that is presumably attainable in month or so with the precise surroundings.

Wanting ahead, we do have main catalysts that would preserve volatility excessive for AUD/CAD, most notably the Reserve Financial institution of Australia and Financial institution of Canada’s newest financial coverage determination subsequent week, adopted by Canadian inflation and Australian employment the week after.

So, the state of affairs we’re watching out earlier than contemplating a brief on AUD/CAD is the place the RBA pushes again on a number of price hikes as soon as once more, and if the BOC offers us greater than a 25 bps hike and/or raises expectations of an accelerated price hike schedule.

This state of affairs coupled with the continued rise in oil costs offers the most effective odds of the Loonie out performing the Aussie over the subsequent month, and this commerce of two risk-on currencies in opposition to one another shields us a bit from the present volatility induced by the Russian invasion of Ukraine. Not a foul play.

However what do y’all assume? Will Loonie bulls take again the reins on AUD/CAD? Will we see any surprises from the central banks subsequent week? Please tell us in our remark part beneath!

This content material is strictly for informational functions solely and doesn’t represent as funding recommendation. Buying and selling any monetary market entails threat. Please learn our Danger Disclosure to be sure to perceive the dangers concerned.

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