AUD-CAD still in a downtrend

By: Mike Kulej

Many market participants look at the AUD-CAD pair for clues about the general strength, or weakness, of either one of these currencies. The premise is, that if the AUD-CAD is bearish, than all other crosses of the Australian Dollar will follow. The opposite is true in a bullish scenario.
Recently this pair had been in a steep sell off, falling from 0.9400 to under 0.8700, before rebounding to 0.8950. Over the last week, the downtrend resumed, coming very close to the low established on 05.21. The 0.8645 level is becoming a key support on the intermediate term chart, breaking of which could indicate a beginning of the next price down swing.
Currently the price is very close to that important level and might test it soon. Other technicals also support a continuation of the downtrend – the 100 SMA is above the price level, lower lows are followed by lower highs. The William’s Awesome Oscillator shows a mild negative reading on the intermediate term chart, which confirms the bearish outlook. Breaching of the 0.8645 support would set a stage for another 200-250 pips move in the AUD-CAD and comparable swings in the other Aussie pairs.