AUD/CAD Signals Bullish Continuation with a Breakout

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AUD/CAD Signals Bullish Continuation with a Breakout

The AUD/CAD is seen in the daily chart breaking above a falling consolidation channel. It has been falling from the 2014-high at 1.0350 to 0.9937. Here are a few observations in the daily chart:
1) Price structure of the rally from the 0.9411 to 1.0350 looks to be motive/impulse, while the decline from 1.0350 to 0.9937 looks corrective.
2) Price has stayed above the 200-day SMA during the consolidation. Not only that price is now clearing above the 100- and 50-day SMAs as well, showing that bulls are back in charge.
3) The RSI is now pushing above 60. If the RSI can clear above 60, it would reflect a loss of the bearish momentum.

AUD/CAD Daily Chart 7/30
audcad daily chart 7/30

(click to enlarge)

Pullback:
Looking at the 4H chart, you notice that the rally has been consistent but there is an extend bearish divergence brewing. If price pulls back down, monitor the 1.0100 area for support. In a bullish market there should be buyers in this area. It is a previous support/resistance pivot, and will likely be reinforced by June’s rising trendline. A break below 1.0080, especially if the RSI also falls below 40, would likely put the focus back toward consolidation, instead of bullish continuation. Consolidation mode means focus back toward the 0.9940 area with risk of breaking lower toward 0.99.

AUD/CAD 4H Chart 7/30
audcad 4h chart 7/30

(click to enlarge)

Bullish confirmation:
If the bullish continuation case is confirmed, and price shows ability to stay north of 1.0100 while the 4H RSI holds above 40, the AUD/CAD will have exposed the 1.0242 and 1.0350 resistance pivots. When you look at the daily chart, you can confirm a bullish attempt since 2013 that is still developing.

Price appears to be holding above the 200-, 100-, 50-weekly SMAs. While the short to medium term bullish outlook has the 1.0350 high on the year in sight, the bigger picture shows upside risk toward some common highs just above 1.05.

AUD/CAD Weekly Chart:
audcad weekly chart 7/30

(click to enlarge)

To contact the reporter of this story, email Fan Yang at fan@forexminute.com
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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.