Time to take advantage of the weakness in the Chinese economy and the yuan with another AUD short? Got my eyes locked on AUD/CAD this week and here’s why:
As Big Pippin shared in today’s Chart Art, the pair is currently testing support turned resistance right at parity. I was able to grab a bunch of pips off an AUD/CAD short around parity last year and I’m inclined to think that this level will hold as resistance yet again. After all, stochastic has already reached the overbought region and is starting to make its way down.
I’m a bit hesitant to jump in at market though, as I already have an AUD/USD swing short open. But with the freshly released weaker-than-expected Australian quarterly construction work done and the potential 1.0% decline in the country’s private capital expenditure, I don’t really want to get left behind.
If I do decide to short, I plan to set a wide stop at the 1.0200 mark and aim for the previous lows near .9400. That should give me a nice 3:1 reward-to-risk ratio, which I can still improve if I add to my position later on. What do you think?
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