AUD/CAD has been in a very strong uptrend all year, but in recent weeks the uptrend accelerated visibly after price crossed the 1.0000 level.
Technical Analysis
After breaking above the upper trendline of a very steep channel for the last two months and the 61.8% fibonacci retracement on the long term 1.0713 – 0.9168 downtrend, AUD/CAD eyed the major pivot zone at 1.0270. The resistance of the bullish channel formed in the last 10 months also backed up this level.
At the end of the European session there were no bearish reactions whatsoever to this level, as the bullish move seemed to further accentuate when it shot up as high as 1.0315. Once the US session began buyers finally backed down and AUD/CAD retraced most of it’s gains from today.
With Stochastics in overbought territory on all major timeframes and facing such a strong resistance, it remains to be seen if the pair will manage to remain below the resistance. A short break from the uptrend could lead AUD/CAD to pull back towards 1.0100 or even parity level, so that the support levels can be tested again.
Above 1.0270 – 1.0300 the trend will continue in similar fashion. The first resistance level is 1.0421, followed by 1.0550 and eventually 1.0700 – 100% retracement of the bearish trend.
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Prepared by Alexandru Z., Chief Technical Strategist at Capital Trust Markets