The AUD/CAD shows a potential uptrend taking shape as key resistance levels are tested.
Disclaimer: The analysis presented in this article is for educational purposes only and should not be considered as financial advice.
This analysis was done on MetaTrader 4.
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AUD/CAD symbol on the MT4 platform
Key support levels: 0.9475, 0.9425
Key resistance levels: 0.9700, 0.9820
We’ll observe the daily chart since it provides the clearest picture of the long term price perspective. All-in-all, there were two key resistance areas produced by AUD/CAD.
The first resistance is near 0.9150, which was broken on May 20th. Fibonacci retracement indicator was applied to the corrective wave down after the break above the resistance. It shows two important resistance levels, namely the 527.2% Fibs at 0.9698 and 627.2% Fibs at 0.9821.
The second key resistance was formed in June this year and was located near 0.9440. This resistance got broken as well and later on was acting as the support and rejected twice.
Four days ago, there was a clean bounce off the 50 Simple Moving Average, which suggested the starting point of the uptrend continuation. Based on the 527.2% Fibonacci retracement level, discussed earlier, the 0.9698 could be the nearest upside target. This level corresponds to the previ9uosly established high as well as the 127.2% Fibonacci retracement level applied to the most recent pullback. However, it is possible that the price will break above, and in this case, the next resistance becomes 0.9821.
In regards to the downside risk, a daily break and close below 0.9423 low established on August 21, will immediately invalidate the bullish outlook. In this scenario, AUD/CAD should be expected to turn bearish in the long run.