AUD/CAD has been trading inside a range on its 1-hour time frame, finding support at the 1.0115 area and resistance at the 1.0215 level, setting up a forex signal short idea. Price has recently come off a test of the range support and appears ready to test resistance once more.
Stochastic is on middle ground, although it is on its way down and indicating a pickup in selling pressure. A move higher could signal a return of buyers, which might take the pair up to the top of the range before drawing in sellers. If the range resistance holds, another test of the range support might take place.
A forex signal to short at 1.0215 with a tight stop and a target of 1.0118 could yield a high return on risk for a day trade. Trailing the stop could be a good way to minimize risk and lock in profits as price moves lower.
Forex Signal Outlook
The event risks for this forex signal include the Australian retail sales and trade balance releases, as well as the Canadian trade balance release. Retail sales came in line with expectations at a 0.4% increase while the trade balance was better than expected at a smaller than expected deficit.
Meanwhile, Canada is expected to show a smaller trade surplus of 1.1 billion CAD compared to their previous 1.9 billion CAD, which might be negative for the Canadian dollar and possibly trigger a forex signal breakout. If the actual figure comes in stronger than expected though, the Loonie could regain ground.
It appears that the path of least resistance for this pair is to the upside, as the Australian dollar is in a fundamentally stronger position compared to the Canadian dollar, although reports could shift that view. A forex signal breakout in either direction could lead to as much as 100 pips in gains or losses for the pair.
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