I don’t trade the AUDCAD often due to the relatively choppy price action that can make things a bit more difficult to read. The pair has a propensity to move in tight ranges even when trending higher or lower.
However, there is the occasional pattern that deserves a closer look and the wedge that has been forming since April appears to fit the bill.
But unlike most wedges that form after a rally, I’m not interested in a break of resistance. Instead, I’m keeping a close eye on wedge support which at the moment comes in near 0.9960/70.
The reason I’m more interested in a break of support has to do with the pair’s behavior throughout the month of June. Notice how after testing wedge support on June 1st sellers forced a second and third retest on June 13/14 and last week on the 22nd.
Now, if we compare that to the one retest of resistance on June 6th, we can see the disparity between supply and demand. This type of contrast between bids and offers is something I’ve referred to in the past as “heavy” price action.
With that said, only a close below support would warrant further consideration. So until that day comes, I’ll continue to watch from the sideline.
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A close below wedge support near 0.9960/70 would pave the way for a retest of the January 27th swing low at 0.9850. A close below that would expose the current 2017 low near 0.9645. Alternatively, a move higher would likely encounter selling pressure near 1.0100.
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This pair is equally strong right now. Not my preferred pair. I’m looking at EURGBP, GBPCHF, USDCAD and I might dabble with NZDJPY. Here is my currency strength scores I did today:
USD = -3
JPY = -5
EUR = 0
GBP = -6
AUD = 5
CAD = 5
CHF = 0
NZD = 6
Most people would assume take the weakest and simply pair with strongest but the problem is finding good entry and you don’t often get a decent pullback. I like to find a strong currency and pair it with a medium weak or vice versa a weak currency with a medium strong. Hope this helps.
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