AUD/CAD rallied yesterday, after it hit support near the crossroads of the upside support line drawn from the low of April 3rd and the lower end of a falling wedge formation that’s been containing the price action since June 3rd. The rebound took the rate above the upper bound of the wedge, which combined with the fact that the pair is also trading above all three of our moving averages on the 4-hour chart, paints a positive near-term picture.
If the bulls are strong enough to stay in the driver’s seat, we would expect them to soon challenge the 0.9445 barrier, marked as resistance by the high of June 5th. If they don’t stop there, we could see them climbing towards the psychological zone of 0.9500, the break of which may pave the way towards the high of April 23rd, 2019, at around 0.9540.
Shifting attention to our short-term oscillators, we see that the RSI, already above 50, has turned up again, while the MACD lies above both its zero and trigger lines, pointing north as well. Both indicators suggest that AUD/CAD may have started gaining upside speed again, which corroborates our view for more short-term advances.
In order to start examining whether the bears have gained the upper hand, we would like to see a strong dip below yesterday’s low of 0.9270. This would confirm a forthcoming lower low and would also drive the rate below the aforementioned upside line and the lower bound of the wedge. The bears may get encouraged to sail south towards the low of June 2nd, at 0.9195, the break of which could see scope for larger downside extensions, perhaps towards the 0.9105 level, defined as a support by an intraday low formed on May 28th.
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