Yo! Looks like the symmetrical-ish triangle on AUD/CAD’s 1-hour chart, which we found on March 14, finally broke to the upside. Aww, yea! Heck, it even broke past the key area at 1.0250 that I told y’all to keep an eye on. So, if you got in at or around the breakout point and you still have your position open, then you probably have about 90 pips or so, which ain’t bad. If you jumped in at 1.02550, then you probably only have about 30 pips or so, assuming you didn’t bail when the pair pulled back for about 50 pips.
Anyhow, the pair is pulling back, so today’s play is obviously gonna be a Fibonacci retracement setup. And using our Fibonacci tool, we can see that the pair is currently close to the 38.2% retracement level. More conservative forex traders may wanna focus on the 50% retracement level, though, since that’s just below the key price level at 1.0250. Also, the 100 SMA would be acting as dynamic support when or if the pair does get there. But for the more gangsta traders out there, just know that there’s a small chance that the pair may begin climbing higher again. After all, stochastic is already signaling oversold conditions and all that.
Back on March 16, the pair was at the channel’s support area. Instead of telling y’all to start lookin’ for opportunities to go long, however, I told y’all to think twice before going long, since there was a currently a higher-than-average chance for a downside channel breakout. Well, guess what, dawg. That’s right! My instincts were right, since the pair did stage a downside breakout. And currently, the pair is pulling back, so we may get an opportunity to jump in with a short soon.
Using our Fibonacci tool, we can see that the pair is testing the 50% retracement level, which happens to line up neatly with the area of interest at 113.20. Not only that, them moving averages just recently crossed over into downtrend mode, with the 100 SMA seemingly acting as dynamic resistance. Moreover, stochastic is already indicating overbought conditions. Overall, lots of technical arguments favoring further downside moves. Anyhow, if the pair does go back down, then them bears would likely be gunning for 112.30 and then 111.20. Do know, however, that if the pair climbs higher to 113.70 on strong momentum, then y’all may wanna think about bailing, since that means that them bulls are trying to push the pair back into the channel. In any case, just make sure to practice proper risk management, a’ight?
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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.