AUDCAD: Caution Required As Prior Support Looms Large

AUD/CAD – Charts & Analysis

As of writing: Strength Vs Weakness Tables Standings

• AUD is showing W2 (Weak) and W3 on the Trend and Day trading tables respectively
• CAD is showing S3 (Strong) and S2 on the Trend and Day trading tables respectively

Link to LIVE/Rolling Strong/Weak Tables HERE

Observations:

• The WEELKY chart above shows:
  • A range resistance area of 0.9400, established May ’21
  • A range support area of 0.8900, established April ’19, last tested Jan ’22
  • We currently see another test of the 0.89 handle developing
  • Below the 0.89 handle we see little by way of technical level support right through to prior channel support circa 0.8400

• The 0.89 support handle will be clearly visible to all professional market participants, as such it’s a major factor in forthcoming trade plans
• ADX: Shows sellers retain control
• Stochastic: Shows momentum remains to the downside

• Many will see this chart and attempt to identify a pattern within: Truth is, I’m a simple hunter gatherer, and armed with my Strength Vs Weakness Tables I simply see both our Antipodean cousins (in this case AUD) under sustained pressure alongside a buoyant CAD reaping the rewards of its primary export, i.e. Oil 

Observations:

• The DAILY chart above shows:
  • Again the proximity of current price to the 0.89 support handle
  • A relatively flat 200 SDMA
  • The addition of a bearish Fibonacci Retracement tool which, to be honest looks better on the 8 Hour timeframe but serves it’s purpose on the daily chart, shows the possible 38% retracement level circa 0.8990 / 0.9000 zone
• ADX: Again we see sellers in control, with trend strength seen relatively benign below the 25 handle
• Stochastics: Always more sensitive, particularly on the lower timeframes, indicates a slowing of selling pressure as %K crosses back above %D, however both reside below the 20 handle so sellers remain in control.
  • This slight pause in downside momentum is indicative of the market’s recognition of the 0.8900 support handle and associated profit taking from the last downside leg.

Current Narrative:

• The current narrative is undoubtably to the downside, with sellers in control of the weekly and daily charts
• Strength Vs Weakness Tables Confirmation:
  • CAD is showing in the top 3 strong on every timeframe
  • AUD is showing in the top 3 weak across the board

My Trade Plan:

• I am already short this pair
• Inline with the market I am taking profit as price approaches the 0.89 support handle 
• I anticipate price reacting to support. Should this happen I will place another sell order circa the 38% Fib Retracement level

Strength/Weakness Caveat:

• A removal of either of these currencies from my S/W Trading Tables (HERE) would of course negate this entire trade plan