AUD/CAD is in consolidation mode after a few weeks of selling pressure. Will the upcoming catalyst from Canada lead to more selling or bring in the buyers for a counter trend move higher?
Downside Break in AUD/CAD Ahead?
What’s up forex fiends? We’ve got a potential consolidation break opportunity forming on AUD/CAD, that could be sparked by tomorrow’s employment update from Canada. Expectations are for Canada’s April read to do a complete 180 degree turn from the big job gains in March, eyeing roughly 150K in net job losses and the unemployment rate to tick higher to 7.8%.
If we see the scenario where the numbers play out as expected, it’s possible we could see a spike higher in AUD/CAD, likely on both a reaction to weak Canadian jobs data, but also likely on profit taking from the bearish move we’ve seen over the past couple of weeks.
If you’re in the bullish AUD/CAD camp, consider a short-term bullish position to play the rise volatility, but keep in mind that there is potential resistance around the previous broken support area (around 0.9530) that could limit any upside moves, especially given that a long position would be counter trend.
Now, if we see a surprise from Canada in the form of a net jobs gain/stable or improving unemployment rate, then it’s likely that quasi-descending triangle pattern could draw in sellers and that a break of the support area around 0.9460 would draw in further sellers.
Technical players would see this as an opportunity to play the downtrend, and even fundamental traders would likely jump in given the recent bearish headlines from Australia (China suspends economic dialogue mechanism with Australia) and the broad bullish sentiment on the Loonie after the latest Bank of Canada meeting that signaled potential tapering coming.
What do you guys think? Will AUD/CAD break to the downside on bad Canadian data? Or will we get the positive jobs surprise to keep the bear train going?
Let me know in the comments below, and 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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