AUD: CAD caught my eye when looking for strategically placed Aussie charts leading into this afternoon's rate decision.
As the chart below shows, we are currently parked just below the neckline of an inverse head and shoulder pattern. Entry could be triggered if the RBA surprises by not cutting rates this afternoon.
This head and shoulder appears at the bottom of what could be a 5 swing decline suggesting the possibility of a significant corrective rally.
On that basis the profit objective targets a 50% retracement of the entire 5 swing move. This coincides with the 200 day moving average.
The 38.2% retracement level is close to the measuring target for this head and shoulder. I've left this projection off the chart to cut down the clutter. On that basis this strategy would move to a trailing stop once the 38.2% level is reached.
The initial stop shown on the chart is behind a minor support level back in the body of the pattern.
A typical approach to entry strategy would be to buy on a confirmed break above the neck line. Many traders would apply a price filter, placing their stop entry a bit above the neck line to reduce the chance of getting caught in a false break