We’re keeping it simple with a couple of Fibonacci setups on AUD/CAD and GBP/CHF, while CAD/CHF is clearly showing bullish technical patterns ahead of top tier Canadian data this week.
Starting this week’s Crosses Watch with a look at the AUD/CAD’s four hour chart. The pair recently quickly bounced higher after a swing move lower from 0.9145 to 0.8835, recently hitting as high as 0.9027 (61% Fibonacci retracement level) before sellers hopped in to take back control. So, it looks like this pair is ready to start a new leg lower, but keep in mind that there are some potential Aussie dollar catalysts ahead and of course, the ongoing trade war story between the U.S. and China will likely keep the action rolling in the Aussie and Loonie as well.
And speaking of the Loonie, Canada’s got some top tier economic catalysts this week, most notably the monthly Canadian employment update at the end of the week. That pushes CAD/CHF to the top of the watchlist, given that recent price action could setup for both a bullish or bearish move.
For the bulls, the pair is trending higher over the past two months, but recent price action has brought the market back to a strong area of interest around 0.7450 that has served as support in September. This could be another buying opportunity, especially with stochastic signaling oversold conditions, but if the pair breaks on this week’s Canadian data, that rising trendline break is likely to draw in momentum sellers if the data disappoints.
Last but not least, we’ve got another Fibonacci retracement setup, this time a longer-term play in the works for GBP/CHF. From the beginning of May through August, the pair made a massive swing move lower from 1.3400 to just below 1.1700 before bouncing higher through the end of September. The resistance came around the 38% Fibonacci retracement area, but it’s been all sideways action hits then.
This week we’ll see updates from the U.K. on GDP and manufacturing data, as well as comments from Bank of England Governor Carney to potentially get the pair out of its consolidation funk, and can’t ever forget the rising uncertainty of the Brexit situation to always be a spark for massive volatility at any given time. If we do get a negative Sterling catalyst in the next week or two, the down move to the swing lows and beyond are very attractive from a potential risk-to-reward if using the two or three daily ATR as a stop guide.