With the latest RBA meeting right around the corner, we’ve got technical setups for both Aussie bulls and bears, and a bonus for those watching the Loonie!
Last week, we highlighted a descending channel on AUD/NZD and looked out for a retest of the falling highs for a potential opportunity to play the downtrend. But there was no bounce and the picture morphed from a descending channel into a descending triangle break that seems to be holding for the bears at the moment.
If you’re already done your homework on the upcoming RBA interest rate decision and you’re bearish on the Aussie, this is still a great pair to play that idea given the technical downtrend in price and the interest rate carry in favor of the Kiwi at the moment. For the more conservative traders out there, look out for a bounce and retest of the broken support area at the major psychological level of 1.0500 for reversal candles signaling a return to the downtrend, especially if stochastic makes its way back to signal potentially overbought conditions.
For the bulls on the Aussie, EUR/AUD might be the pair to watch as it recently made a double toppish pattern around 1.6400 before falling and breaking the neckline around 1.6300. Again, with the RBA meeting around the corner, it’s probably a good idea to be conservative with the entry around most central bank events.
Waiting for a retest of the broken neckline is a prudent move and if we see resistance at 1.6300 and then a move lower back to the downside after the event, the pair could draw in sellers mid-term to retest the next major support area around 1.6100, which is more than two times the daily ATR for a nice potential R:R.
Last but not least, for those looking to stay away from the RBA event, GBP/CAD presents a very textbook downtrending move in the form of the descending channel on the four hour chart. The pair is currently riding the bottom of the channel, so it’s probably a good idea to wait for a pullback higher before considering playing this pair to the short side.
With a daily ATR of around 80 – 90 pips, this pair could move to the top of the channel within a couple of sessions, and the likely catalyst for that to happen could come from the top tier economic event from Canada later this week in the form of the monthly jobs update and IVEY PMI data. The U.K. may contribute volatility as well with the Prime Minister race heating up and U.K. PMI data throughout this week.