AUDCAD Forex Forecast – Simple Downtrend Pullback

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AUDCAD Forex Forecast - Simple Downtrend Pullback

AUDCAD Forex Forecast - Simple Downtrend Pullback

AUDCAD has been trending lower on the 1-hour time frame and it looks like a trend pullback might be in order. Drawing a descending trend line connecting the latest highs of price action and using the Fib tool on the latest swing high and low shows that the 61.8% retracement level lines up with an area of interest.

In particular, this Fib is just below the .9850 minor psychological level, which also happens to be near the 100 SMA dynamic resistance. This short-term moving average is below the longer-term 200 SMA, which confirms that the downtrend is likely to carry on.

If so, AUDCAD could move back to the previous lows at the .9700 major psychological mark. Stochastic is making its way down from the overbought region so sellers are gaining the upper hand. However, RSI is still on the move up and hasn’t quite made it to the overbought area yet.

Crude oil price declines have weighed on the Loonie lately, as recent meetings among smaller oil-producing nations have failed to bear fruit. In addition, the American Petroleum Institute recently reported an increase of 2.4 million barrels in stockpiles while the US Energy Information Administration is expected to show a buildup of 3.1 million barrels.

Higher gains in oil supply could further drive prices lower and perhaps even trigger an upside break for AUDCAD if the Loonie is also dragged down by the commodity. However, the Canadian currency appears to be more resilient these days, even with downbeat jobs data released last week.

Data from Australia has been positive so far, with the Westpac consumer sentiment index showing a strong rebound and HIA new home sales up by 6.0%. Still, risk aversion could weigh on the higher-yielding Aussie, especially in the absence of Chinese and Asian session traders due to the Lunar New Year holidays.

 

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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