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I’ve been watching AUD/CAD for a bit and it looks like I totally missed out on a sweet drop…doh! Fortunately, I think there’s a chance for more downside moves so it’s time for me to take another shot.

AUD/CAD Fresh Momentum Lower

AUD/CAD 4-Hour
AUD/CAD 4-Hour

In case you missed it, the Bank of Canada surprised forex players with a surprise rate hike this week, sending the Loonie up against the majors with a quickness! This is an understandable reaction given that it was a surprise move, not that it was unexpected because the data has been so good, but it really was a 50/50 chance of them holding or hiking either way.

With good economic data and rate hikes on the side the Loonie, I think there’s still more momentum to catch in the downtrend in AUD/CAD, especially since we didn’t see a “buy-the-rumor, sell-the-news” reaction or profit taking so far after the event. But I’m not looking to hop in the downtrend just yet with Canadian jobs data coming soon. Instead, I’ll look for a pullback up to the minor area interest that coincides with the broken swing lows in late August, and the choppy price action that marked the July lows around .9750 -.9850.

So, if the Canadian jobs event can take the market back up there, I’ll look to short with a small position with my usual one weekly ATR stop. My initial target will be the next major swing low that was last seen at the end of 2016, where I’ll re-assess to max out the trade or just take profit. Here’s what I’m doing:

Short half position AUD/CAD at 0.9850, max stop loss at 1.0050, initial target at 0.9600 for a max 1.25:1 return-on-risk potential.

I’ll be risking only 0.5% of my account on this position and against, I’m open to potentially try to maximize my gain depending on what the market stories are if 0.9600 is tested and broken to the downside.

As always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.

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.