The Aussie Dollar has had a great run against its Canadian counterpart. The Aussie has enjoyed the strong run in iron ore and coal prices. The Loonie has not been so fortunate. Its principal export commodity, oil, has been under pressure.
However, the chart suggests AUD/CAD has arrived at a possible turning point. It’s hit the potential resistance of its April 2014 high.
There are a couple of other factors suggesting AUDCAD could fall away from here:
- There is also a neat AB = CD level at the same point. I’ve drawn this on the chart above using the Fibonacci price tool. The last CD swing is the same size as the AB swing
- The slow stochastic in the box below the chart is up in the overbought zone and well above 80%.
4 Hour Chart
At the moment, the shorter term chart is showing signs of drifting sideways in a trading range just beneath the weekly chart resistance.
One approach to entry strategy on the bigger picture sell trade, is to use the shorter term chart, for example, selling if AUDCAD makes another peak in the trading range resistance zone with a close stop just above the upper boundary.
If price falls back to the support; the stop might be tightened in case AUSCAD just bounces off the support again. However, if it breaks clearly below the support, this might confirm rejection of resistance on the bigger picture weekly chart setting up for a larger downward move.