The AUD/CAD pair initially broke higher during the day on Wednesday, but as you can see struggled at the 1.0150 level. The market broke down from there, but as you can see we still see the 1.01 level as an area of interest for the marketplace, as it was previously resistive. With that, I would not be surprise at all to see the market pullback on the short-term charts to find support at that area.
The real question of course is whether or not the downtrend in channel that I have drawn on the chart is still in effect. For me, I think it is. However, I look at this market as one that more than likely will continue to chop around, in a somewhat negative move. This is probably more to do with the Australian dollar struggling than anything else. The Canadian dollar has shown some strength against other currencies around the world, but has struggled against the US dollar recently. Perhaps this is a “Pacific versus North America” type of scenario, as Australia is very dependent on the Pacific economy as well as the Asian one.
Be aware of the 1.0150 level.
Be aware of the 1.0150 level been important. Not only is in an area that shows horizontal support and resistance, but it is also where the downtrend line coincides with the marketplace and slices through. Because of that, the market breaking above that level would in fact the reason enough to start buying, as the market would have shown a break out into different directions to the upside. Because of that, I would be long of this market, aiming for at least the 1.0250 level. But ultimately, I think that we break out to the upside we will more than likely see the highs touched again, if not a move much higher than that.
On the other a, if we break down below the 1.01 level, I think we will drop to the 0.99 handle, which coincides with the support level of the aforementioned down trending channel. Ultimately, keep in mind that this pair does tend to be choppy, see you will have to be patient with either signal.