Last week saw the pair initially continuing with its recent and well established bullish momentum. The second half of the week however, saw the market giving way to the bears, with the pair falling for much of Wednesday, Thursday and Friday resulting in a bearish pin bar on the weekly timeframe.
Our analysis for the Aussie against the Loonie in early January suggested we’d see a push higher in the following weeks towards the 1.0600 area and beyond. We did indeed see the market playing out the way we anticipated with the initial target area being comfortable reached.
With last weeks price action on the weekly charts the pair is suggesting we may see a pull back before the bulls continue to push the pair back higher.
Price in the middle part of last year found strong resistance at the 1.0540 area with at least 3 attempts to break though and 3 rejections. We did finally break though in Oct/Nov of last year however quickly retraced back below. January saw the market once again breaking though this area, however unlike last time, the price managed to hold and continue pushing higher.
Last weeks bearish pin’s suggestion of a pull back could once again see the market gravitating towards the 1.0540 area. However this time we’d be likely to see this area holding as support before a continuation of the current trend.
We’ll be looking to take a short term sell towards the new support area at 1.0540. However, with the market producing price action on the weekly TF, we’ll look to enter at a slightly higher price than where we closed on Friday. A possible 50% retracement of last weeks pin could prove to be a better entry with a stop just above the high of the pin.
