Watching for Resistance Against AUD/CAD

Watching for Resistance Against AUD/CAD

AUD/CAD has been consolidating through much of March and April but is turning to some bullish bias in May so far. Before we get too excited about the prospect of a bullish trend, let’s examine the possible resistance points.

AUD/CAD 4H Chart 5/14
audcad 4h chart 5/14
(click to enlarge)

Looking at the 4H chart we are indeed seeing a choppy but upward swings. However, we price crossed 0.97 there appears to be some strong selling. The candlestick combination around 0.97 can be interpreted as a reversal signal. For the near-term, there is downside risk towards the 0.9560-0.9590 area, where the cluster of 200-, 100-, and 50-period SMAs reside at the moment. A break below 0.9550 with the 4H RSI breaking below 40 would put pressure back to the 0.94-0.9411 lows.

Now let’s put our focus on the upside:

AUD/CAD Daily Chart 5/14
audcad daily chart
(click to enlarge)

The downside is currently protected by he 0.94-0.9411 area, which is support going back to Dec. 2014, and even Dec. 2013-Jan.2014 (we will see this in the weekly chart).

To the upside the area just above 0.97 contains key resistance factors: 1) The 2015 falling trendline and 2) the 200-day SMA. So, don’t be surprised if price falls at least back to the 0.9550-0.96 area. Now if price holds above 0.96 for the most part, that means there is still juice to break above the trendline and 200-day SMA. This scenario would open up
0.9880 area. Above that the parity level would be insight. In the short to medium-term, this would be a bullish outlook, but it would still be in the context of the long-term bearish-neutral mode.

AUD/CAD Weekly Chart 5/14
audcad weekly chart 5/14
(click to enlarge)

The weekly chart shows that in the long-term, at least since early 2013, AUD/cAD has been in either a symmetric or descending triangle.

So, while we should anticipate AUD/CAD making short-term bullish attempts, we need to limit the bullish outlook to the 0.9960-1.00 area.

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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