I’m serving up a Loonie special for y’all this week! Got my eye on a couple of short plays for the bears, and a revisit to last week’s setup that may be ready to move!
Let’s start off with this textbook break-and-retest play on the daily chart of CAD/CHF. The pair is currently testing the area of interest at a former support zone, the 50% Fibonacci retracement level, and the 0.7400 major psychological mark. Phew!
Stochastic is already in overbought territory, but has yet to confirm that sellers have the upper hand with a move lower, so it’s definitely watch mode only for this pair. Price could make its way down to the swing low 0.7200 or lower before buyers take control in oversold conditions.
Next up is a similar setup to CAD/CHF, but with a more defined downtrend in CAD/JPY. This is also great for traders who don’t want to take on as big a negative carry that you would in shorting CAD/CHF if you focusing more on the Canadian dollar.
Like CAD/CHF stochastic is just starting to get into overbought territory, so it’s probably not ready to turn yet, but the combination of strong downtrend momentum and Fibs drawing in technical sellers, and overbought stochastic signal also makes this a definite watch for the next week or so.
Lastly, touching base on one of last week’s watch, AUD/CAD. Last week, AUD/CAD popped higher, but not quite to that strong broken support level around .9570. Well it’s there now, and with the chart currently making lower ‘highs’ and stochastic signaling overbought conditions, this one is for Loonie bulls to watch in case it reverses to the downside.
Not only are the probabilities good for a short trade, but the potential rewards are also attractive with possible support not likely coming until 0.9450 or even the spike low around 0.9300
A break above the falling ‘highs’/triangle pattern on the other hand could draw in buyers who may not take profit until the previous highs around the 0.9800 and 0.9900 handles.