This here is the updated chart for the ascending channel setup that we identified on AUD/CAD’s 1-hour forex chart yesterday. If you guys remember, I said the pair seem to have great difficulty pushing past resistance around the 0.9620 handle. I also mentioned that if that resistance area holds, then we may be looking at a potential downside channel breakout. Well, seems like I was right since resistance held and price broke out to the downside. For today’s play, we are lookin’ to get to ride the downside move via a pullback. And if we apply our Fibonacci tool, it looks like the 50% and 38.2% retracement levels are the most viable levels for price to pullback to since both levels are close to the 0.9550 minor psychological level, a price area of recent market interest. And in the case of the 50% level, the 200 SMA could act as dynamic resistance. There’s a good chance that price will continue moving downward since the moving averages are about to cross-over to indicate a trend shift to the down side.
Price is slowly approaching the 94.50 minor psychological level. In this case, “minor” is an understatement since the last time the pair got rejected there, price moved up for about 200 pips. And before that, the pair tried to unsuccessfully violate this price area way back in March 31, 2015. The result was that price was rejected and got sent up for about 650 pips. All I’m saying is that this price zone is a very significant support area, so price has a very good chance of being rejected. Looking at our indicators, stochastic is already in oversold territory, so forex traders bullish on the pair may be coming in soon. The moving averages are still indicating a healthy downtrend, but it oscillated from July 15 to July 21, so the bulls and the bears are probably starting to fight for control over the pair.
EUR/AUD tried to breach resistance at the 1.5050 minor psychological level but got repelled severely. Now, the pair is trying to break through that level again. Should resistance hold, then we got us a potential double top. And if price breaches the neckline at 1.4690, then we got us a confirmed double top. The aggressive way to play this setup is to anticipate that resistance will form at the 1.5050 level while the conservative way to play is to wait for a breach of the neckline. And should the neckline be breached, price may move for about 360 pips since that is the height of the forex chart pattern. Stochastic just moved from overbought territory, so forex traders bearish on the pair may be in control already.
As usual, make sure to practice proper risk management should you find a trade based on any of these charts.
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To get the complete picture and avoid getting blindsided by economic data, you also have to do your fundamental analysis. Lucky for us, Pip Diddy fills us in on what we need to know about fundamentals with his Daily Forex Fundamentals.AUD/CAD 1-hour Forex Chart