AUDCAD Testing Major Support
The decline in AUDCAD over this year has seen price trading down from highs around the 1.0000 level, right down to test major, long-term support at the .9267 level. This level is holding as support for now, with big bullish divergence in both the RSI and MACD indicators, suggesting the risk of reversal higher here.
Looking at retail positioning data, the retail community has started to scale back longs recently, with short positions jumping over the last week or so, suggesting room for a fuller correction higher. On a break of current highs, bulls can look for a test of the .9474 level next, and the retest of the bear channel top.
Alternatively, if AUDCAD breaks below the .9267 level, this is a significant technical development paving the way for a continuation of the bearish trend. Below there, .9146 and .9026 are the bear targets to note.
Key Data to Watch
The main event this week is the Bank of Canada meeting on Wednesday. Following the recent tapering announcement, traders will now be looking to see if the BOC steps up its tapering operations in response to higher oil prices and (mostly) better data recently. If it does, CAD will trade higher in the near term. If it holds off on tapering for now, this could see AUDCAD higher, though the scale of the move will depend on the bank’s forward guidance.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.