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The Aussie has been taking one punch after another, with downbeat Chinese data and disappointing wage figures. Is AUD/CAD in for a breakdown?

Short AUD/CAD Idea

On the pair’s daily time frame, I’m seeing a descending triangle pattern with support around .9700-.9750. Price already seems to be breaking lower, driven by a slew of weaker-than-expected reports from China and more recently a downbeat quarterly wage growth figure from Australia.

The chart pattern is approximately 600 pips tall, so the resulting downtrend could be of the same size. However, stochastic is indicating oversold conditions for now, which means that a bounce back to the triangle resistance near .9900 is still possible.

AUD/CAD Daily Forex Chart
AUD/CAD Daily Forex Chart

I’m inclined to wait for the Australian jobs figures to be released before hopping in, but I’m also worried that I might miss the entire move. Then again, I’m not THAT confident about my breakout setups compared to break-and-retest plays.

Besides, Canada is also scheduled to release its CPI readings before the end of the week, so I might still be able to get a chance to short at a better price, either on a pullback to the triangle resistance or to the broken support.

AUD/CAD 4-hour Forex Chart
AUD/CAD 4-hour Forex Chart

Zooming in to the 4-hour chart, however, shows a short-term range support breakdown right around the mid-channel area of interest. This could be indicative of strong bearish momentum that might take the pair down to the channel support near .9500.

As you’ve probably guessed, I’m feeling really tempted to hop in but at the same time wondering if I should be more patient and wait for a pullback instead. After all, the Loonie is also under a bit of pressure as crude oil is edging lower lately.

Care to share your thoughts on this setup? Maybe take half my usual risk on a market entry then another half on a pullback? Here’s what I’m thinking:

Short AUD/CAD at market (0.9675) for 0.25% risk and at .9875 for another 0.25%, stop loss at 1.0025 and profit target at .9325. 

Cheers,

Happy

See also: Q3 2017 Trading Performance Review

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.