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Has the AUDCAD reached a short-term bottom?
Watch the video below to find out what I think.
Be sure to also scroll down for more commentary and an annotated chart.
On November 13, I pointed out a possible bullish scenario developing for the NZDCAD.
We were watching for a break above the 0.8500 confluence of resistance for a move into 0.8640.
There is also a second Canadian dollar pair that’s starting to look promising.
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The AUDCAD may not be as clean as its NZDCAD counterpart in terms of its technicals, but the bottoming pattern is intact nonetheless.
One thing we don’t know, however, is whether the right shoulder is fully formed.
AUDCAD buyers would need to close the pair above the neckline near 0.9100 to confirm that the right shoulder has developed.
Such a close would also confirm the potential inverse head and shoulders.
Until that happens, the 0.9100 area will continue to serve as resistance and attract sellers.
However, if AUDCAD bulls can secure a daily close above the neckline, we could see the pair drift higher toward 0.9230.
Notice how 0.9230 served as support in May before flipping to resistance in July.
Given the 300 pip height of the possible inverse head and shoulders, the measured objective comes in somewhere near 0.9380.
Just keep in mind that this pattern is not confirmed yet.
Furthermore, the AUDCAD may need to rotate even lower or at least churn sideways for longer before the right shoulder is fully developed.