Looks like I missed the boat on my AUD/CAD short forex idea! But I still think it’s worth hopping in this downtrend since fundamentals seem to favor a continuation of the breakout move. Oh, if you’re wondering what I’m talking about, better check out my initial AUD/CAD trade idea here.
As you can see from the chart below, the pair made a pretty shallow correction after breaking below the .9400 major psychological mark, which suggests that Aussie bears and Loonie bulls are eager to push AUD/CAD lower. After all, oil prices have been on the rise lately, thanks to these five major factors that Forex Gump outlined.
As I mentioned earlier, though, I’m still hoping to catch this downtrend so I zoomed in to the 1-hour forex chart to spot a potential entry point. I’m seeing a descending trend line connecting the latest highs, with the 50% Fibonacci retracement level lining up with a short-term area of interest.
Economic data from Australia has been mostly weaker than expected, as retail sales showed a 0.1% decline for July versus the projected 0.4% increase. Earlier today, the NAB business confidence index showed a drop from 4 to 1 in August, hinting at a possible slowdown in production and hiring later on. To top it off, Chinese PMI readings have been falling as well, indicating weaker demand from Australia’s top trading partner.
I’m just hesitant to put in entry orders ahead of the BOC interest rate decision this week since policymakers might still maintain their cautious view even though Canada’s energy sector could see some green shoots sooner or later. How do you guys think I should play this?
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