The Australian dollar has been trading lower recently against most of the major currencies, including the Canadian dollar. The AUDCAD pair is currently under correction, which could take it close to the next resistance level from where the sellers are expected to return. So, I think selling rallies in the short term should be preferred once the pair completes the correction.
Looking at the hourly chart of AUDCAD, there is a major resistance zone at around the 1.0130-40 levels. If the pair trades closer to the mentioned resistance zone, makes a stop and creates a bearish divergence, then we can jump into a sell trade. Remember, the pair should hold the 1.0190 level for this trade setup to be valid.
Initial target should be around the 1.00, and final target could be around the 0.99 level. Stop should be placed above the 1.0190 level.
Reviewing yesterday’s events and trades
Yesterday, during the London session, the UK retail sales data and MPC meeting minutes were released. The outcome cam better than expected, as the UK retail sales climbed by 1.3% in April, 2014. The GBPUSD pair jumped in an early reaction, but later fell back towards the 1.6880 support level. The pair again traded higher later. Moreover, the FOMC meeting minutes were published during the NY session, which caused a slide in the US dollar. The EURUSD pair after sliding towards the 1.3630 managed to climb back towards the 1.3680 level.
Fundamental Outlook for the day
Today, there are few major risk events scheduled in the US and the Canada, including the Canadian retail sales data, US initial jobless claims, Chicago fed national activity, US manufacturing PMI and existing home sales data. Any of these events can cause swing moves in the market. It would be interesting to see whether the pairs like EURUSD and AUDUSD can manage to recover the lost ground or not. We need to be very careful moving ahead, as these pairs are trading at major support levels.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: GBPUSD, EURGBP, AUDUSD, EURAUD, NZDUSD and USDJPY.
Get it HERE: Vladimir’s Markets Forecast
Trade safe friends. Happy trading!
