With an empty economic calendar ahead, focusing on technical analysis and risk sentiment for the session. Does this support break on AUD/CAD have the legs to move lower?
|Equity Markets||Bond Yields||Commodities & Crypto|
|DAX: 12222.39 +0.57%
FTSE: 7459.88 -0.15%
S&P 500: 2902.81 -0.08%
DJIA: 26503.06 -0.21%
|US 10-yr 2.581% +0.023
Bund 10-YR 0.024% UNCH
UK 10-YR: 1.191% -0.006
JPN 10-YR: -0.03% UNCH
|Oil: 65.53 +2.39%
Gold: 1277.30 +0.10%
Bitcoin: 5303.29 +0.28%
Etherium: 170.99 +0.78%
Fresh Market Headlines & Economic data:
- Oil prices hit nearly 6-month highs on reports US will end Iran sanctions waivers
- Trump will end Iran sanctions waivers, seeking to drive oil exports to zero
- China stocks fall most in nearly 4 weeks on worries Beijing may slow policy easing
- Chicago Fed National Activity Index (CFNAI) Indicates Growth in March to -0.15 in Mar. from -0.31 in Feb.
- Theresa May to face grassroots no-confidence challenge
- Half of Economists Now Expect BOJ’s Next Move to Be More Easing
Upcoming Potential Catalysts on the Forex Calendar:
- No scheduled events ahead for the rest of the session
What to Watch: AUD/CAD
With a lot of countries still in holiday mode for the next couple of days, there’s not a to work with to begin the new week. So, it’s likely intermarket drivers and broad risk sentiment will be the heavier influence on currencies for the time being, and looking above, we can see a slight risk-off lean with equities in the red and oil once again on the move to the upside due to geopolitical factors. With those two themes playing out today, it makes sense to check out AUD/CAD as it looks like the Aussie is taking a hit on global risk-off sentiment while the Loonie is likely supported by today’s oil rally.
From a price action perspective, the pair just broke a minor support area around the .9550 handle on today’s drivers and again, with no scheduled catalysts ahead, this could draw in sellers to play the technical break with a very low probably of getting faked out by economic news. So, the argument is there for a bearish play on AUD/CAD, with multiple entry strategy options depending on your risk tolerance. For the conservative, the pair has almost moved its daily ATR of 50 – 60 pips from the Friday close, so a bounce might be ahead. Looking for a retest and reversal pattern of the .9550 – .9560 area is probably the way to go and gives the best potential R:R if you’re using the break of the swing high (around .9580) as a stop and the .9500 major psychological level as a target.
For the more aggressive, or those afraid that the momentum may not stop here, shorting at current levels is an option but you’re giving up a higher potential R:R. With only 30 pips to go until the next support area and 50 pips up to the invalidation area (above the falling ‘highs’ pattern), the R:R is less than one but the probability is better than 50:50 to hit the target.
For the bulls, there’s not a lot to go on here until we see a break of the falling ‘highs’ pattern and/or a strong fundamental catalyst. Again, no schedule catalysts are on the horizon, so if you’re really a AUD/CAD bull, you’ll have to keep a close watch on the news feed before making a move.