Chart of the week – AUD/CAD
AUD/CAD further potential downside after minor bounce
Short-term technical analysis
Source: CMC Markets
- Both the Australian and Canadian central banks will hold their last respective monetary policies decisions for 2021; Tuesday, 7 December for RBA (0330 GMT) and Wednesday, 8 December (1500 GMT) for BoC. Let’s us take a look at the FX cross pair, AUD/CAD from a technical analysis perspective.
- Last week, the AUD/CAD has staged a bearish breakdown below a significant 0.9140 support level and had a weekly close below it. This latest development in price actions suggest that the major uptrend phase for AUD/CAD from its March 2020 low of 0.8072 to 25 February 2021 high of 0.9994 has been damaged; the cross pair is likely to be undergoing a potential multi-month bearish trend sequence now (see weekly chart).
- The short to medium-term (multi-week) AUD/CAD bearish trend in place since 27 Oct 2021 high of 0.9337 remains intact but the risk of minor bounce towards 0.9030 intermediate resistance, holding above 0.8960 cannot be ruled out at this juncture as the 4-hour RSI oscillator has dipped into the oversold region (see 4-hour chart).
- Watch the 0.9075 key short-term pivotal resistance and if 0.9075 is not surpassed to the upside, the AUD/CAD may shape another impulsive down leg towards the next support at 0.8895 (a cluster of Fibonacci expansion levels).
- However, a break with an hourly close above 0.9075 negates the bearish tone for an extension of the corrective rebound to retest 0.9140 (the major bearish breakdown level as depicted on the weekly chart).
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