There is a week open gap for AUDCAD at around 0.9560 as shown in the daily chart below, and I think the pair may drop down and close the gap. However, there is also an inverse head and shoulders on the daily chart, which can push the pair to the upside. So, we will not chase the rise, but may look to enter a sell trade when the pair moves lower.
There is a clear up-move trend line as plotted on the 4 hour chart below, and support lies at around 0.9650 and 0.9640. If the pair breaks down, closes below the trend line and support, then we can look to enter a sell trade. Remember, we need to be very careful and in order to avoid any false break we will also wait for the RSI to break and close below 50 on the 4 hour chart before entering the trade. Initial target should be around the gap close and final target could be around 0.9510. Stop should be placed above the broken trend line and support. Canadian retail sales data is due later, which may bring some volatility for the pair.
Reviewing yesterday’s events and trades
Range trading was seen yesterday as there was no major market moving news or fundamental event. ECB President Draghi said nothing new in his speech yesterday, but the market was not impressed by him, and as a result EURUSD broke 1.3500 level. Manufacturing and Services PMI data released from the euro zone was mixed, which also weighed on the EURUSD. Other than this, NZDUSD traded lower early in the Asian session, and USDJPY remained firm and finding bids from important and key level of 98.60.
Fundamental Outlook for the day
CB consumer confidence figure is scheduled to be released in the US session, which is expected to decline to 79.9 from the previous reading of 81.5. Any surprise to the upside may push US dollar higher across the board. Canadian retail sales data is also lined up and is expected to show a lot of improvements with a gain of 1%. If data does not disappoint, then CAD may trade higher in short term. Also, later in the next Asian session New Zealand trade balance data will be released, and it would be interesting to see how data shapes after a huge deficit in July-August. So, watch all these events if you are trading USDCAD, NZDUSD, AUDCAD and AUDUSD.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EURUSD, GBPUSD, AUDNZD, EURNZD, EURJPY and NZDUSD.
Get it HERE: Vladimir’s Markets Forecast
Trade carefully friends. Happy trading!
