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As traders continue to battle between pandemic developments, monetary policy speculation and improving economic data, short-term range plays are definitely setups to watch during this slow Summer season.  Here’s one on AUD/CAD, a pair with good odds the range will not break just yet.

AUD/CAD Range Play Setup

AUD/CAD 4-Hour Forex Chart
AUD/CAD 4-Hour Forex Chart

It’s been a relatively calm Summer for the financial markets, especially in the currency markets as volatility has trended lower in most forex pairs. As mentioned in the into, it’s likely a mix of relatively few major catalysts, negative trending pandemic updates (WHO’s Chief scientist warns the pandemic isn’t slowing down), improving economic updates, and shifting monetary policy speculation that’s got traders a bit reluctant to make big moves at the moment.

With those dynamics likely in play for until next month, rangebound behavior may continue to be the norm, especially in AUD/CAD which doesn’t have much in the way of  major economic catalysts schedule for the rest of the month.

There is the latest CPI update from both Australia and Canada before the month’s close, but with the trend of high inflation around the globe, the odds are pretty good that they will not garner a big reaction.

Is CAD stronger than AUD? Check out our newly released Currency Strength Meter!

With the probability looking pretty strong that AUD/CAD would likely stay rangebound in July, we’ll be watching the top and bottom of the range for reversal candles. But with the Bank of Canada recently announcing further tapering of their bond purchase program, and Australia heading back into lockdown protocols to fend off the covid-19 Delta variant, we’ll be leaning more towards taking a short position than a long position, unless the information changes.

And of course, if the information changes and/or we see a large exogenous shock to the financial system or pandemic developments,  then we’ll see if it makes sense to watch for a consolidation range break in AUD/CAD.

What do you guys think? Is AUD/CAD set to stay range bound or did we miss something that could spark the pair to go into a momentum move? 

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.

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.