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Day two: selling AUD/CAD

I looked at selling AUD/CAD on a slight rally (at the time) to 1.0225; however the pair carried on selling off and the bounce I expected never materialised.

The pair went on to hit a session low of 1.0142 overnight, however looking at the hourly chart the pair looks oversold and I would not be chasing this move. Given the trend break on the daily chart and negative price action, I feel lowering my proposed limit to 1.0185 looks wise. This is just under the 38.2% retracement of the recent 1.0267 to 1.0143 sell-off. Looking at the big move we saw on April 23, the pair subsequently saw good short covering and the 38.2% retracement of the prior fall capped the gain.

It’s interesting to see the RSI on the hourly chart is making higher lows, however price is actually making lower lows, highlighting divergence, in-turn suggesting a slight reversal is due. At 11:30 we get Australia March private sector credit and the market expects an increase of 0.4%, so a good number would push the pair to my potential limit.

AUD/CAD
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