This week, we’ve got top tier economic catalysts ahead from both Australia and Canada that could get this slow grind higher in AUD/CAD a reason to move faster.
Swing Uptrend Play on AUD/CAD
As mentioned above, I’m taking a look at AUD/CAD this week as the odds of higher volatility are likely higher than usual with economic events from Canada and Australia on the way. We’ve also got economic updates from China, which tends to spark moves in the Aussie give Australia and China’s close trading relationship.
From Australia, we’ve got the latest employment update as the most notable event, with expectations of both a net jobs increase, as well as a rise in the unemployment rate due to a rise in the participation rate.
From Canada, the latest monetary policy decision from the Bank of Canada will be the likely main focus for Loonie traders this week. But with expectations of no change being priced in, it’s possible that the upcoming OPEC meeting may overshadow the BOC event given the potential impact that the OPEC meeting will have on oil prices.
Overall, I think the combination of the “reopening theme” and positive COVID-19 vaccine/therapy news updates will benefit the Aussie over the Loonie, and that the odds are pretty high that this week’s top tier events will not knock AUD/CAD off of its current trend higher. If anything, a positive Australian jobs data and dovish rhetoric from the BOC will likely get the pair move higher a little bit faster.
So with that, I’m looking to buy into the current uptrend in AUD/CAD, but with top tier catalysts ahead, I’m looking for a slight pullback first. My stop will be below the strong area of interest (between 0.9400 – 0.9425) that held as resistance in June before being broken this month, and my initial target will be two times my risk. Here’s what I am doing:
Long half position AUD/CAD at 0.9425, max stop at 0.9340 with 0.50% risk, initial target at 0.9600
I’ll be risking only 0.50% of my account to start with an initial 2:1 potential R:R. I may add to this position depending on what we see from the Aussie jobs data and the BOC. If my order to buy is not triggered by the end of the week, I will close it before the weekend for no trade. Stay tuned for that update or for an adjustment to close if the conditions for a long position no longer look favorable.
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.
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