AUDCAD rally running out of steam

The Australian dollar is trading higher against most of its major counterparts. However, I think that the Australian dollar might be heading towards a resistance zone against the Canadian dollar. There is a critical resistance area around the 1.0260 levels. If the pair climbs from the current levels towards the mentioned resistance zone, makes a stop and creates a bearish divergence, then we can jump into a sell trade.

Alternatively, there is a triangle forming on the hourly chart for the AUDCAD pair. There is also a support area at around the 1.0200 level. If the pair manages to break the mentioned support zone, then we can jump into a sell trade once the pair retraces back to re-test the broken support zone. Remember, wait for the pair to close below the support zone to avoid any false break trading.

Initial target should be around the 1.0160, and final target could be around the 1.0120 level. Stop should be placed above 1.0280 in the first scenario, and above the broken support zone in the second case.

Reviewing yesterday’s events and trades
Yesterday, the UK industrial and manufacturing production data were the highlight of the London session. The outcome was on the positive side, as the UK industrial production registered a gain of 0.4%, and manufacturing production posted a 0.4% rise. This resulted in a short-term spike in the GBPUSD pair, but later during the NY session the pair was seen trading lower. Similarly, the EURUSD pair also traded lower, as sellers took charge during yesterday.

Fundamental Outlook for the day
Today, during the New York session, the US Federal budget balance data will be published. If the outcome surpasses the expectations, then the US dollar might gain some more ground in the short term. Furthermore, there are some major risk events scheduled during the next Asian session, including the RBNZ interest rate decision and Australia’s employment data. Both these events can cause a lot of movements in the AUDUSD and NZDUSD pairs. So, trade carefully around these events.

This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EURUSD, GBPUSD, EURGBP, USDJPY, USDCAD, AUDUSD, NZDUSD and GOLD .
Get it HERE: Vladimir’s Markets Forecast

Trade safe friends. Happy trading!