AUD/CAD Daily Outlook- Sept. 3, 2013
The AUD/CAD pair is an interesting one, but one that a lot of people don't follow. This is because they mistakenly think that it's difficult to trade simply because both are thought of as commodity currencies. While this is true, it also can be a good measure of gold versus oil. With that being the case, you also have to look at who the two countries supply: in the case of Australia, it's Asia. In the case of Canada, it's the United States. So a roundabout way, this is also a measure of Asia versus the United States.
This makes sense if you think about it, simply because whichever economy is doing better, will be buying more of the goods that come from these export economies. So for example, as the United States seems to be one of the stronger developed economies at the moment, it makes sense that the Canadian dollar gained against the Australian dollar, as there will be more Canadian goods bought. On top of that, oil is doing very well in general, and that does bring up the value the Canadian dollar also.
Nice trend, significant resistance
As you look at this chart, you can see that there is a purple moving average plotted on it, which is a 50 day exponential moving average. The 50 day EMA is one that I pay attention to occasionally, as it is one that a lot of people will plot. The fact that the 0.95 level and the 50 day moving average have lined up so nicely is a fact that I pay attention to. Although the Monday candle did in fact show positive price action, I do recognize the fact that we failed at the 0.95 handle again. I believe that there is a chance to short this pair based upon shorter time frames, and as a result this pair should continue to consolidate just under the 0.95 level, if not break below. I see support at the 0.93 level, but ultimately I believe that the downtrend should continue as it has been so strong.
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