AUDCAD has been on my watch list for several months now. The wedge pattern that had been forming since March recently broke to the upside, leaving us waiting for a retest of the former resistance level as new support.
Given the recent headwinds the Australian dollar has faced I was originally looking for a break to the downside. But as any good trader will tell you, it’s important to remain flexible and take what the market gives you rather than trying to trade an idea that only lives in your mind.
Speaking of what the market is giving us, yesterday’s session carved out a well-formed bullish pin bar at former wedge resistance. As expected, this level is now acting as support and if yesterday’s pin bar is any indication, demand is strong around this level.
Key levels to the upside are also well-formed and can be found at 0.9622 and 0.9747. While these levels are likely to attract sellers, a final objective for the pair could be the trend line that extends off of the April 2013 high at 1.0714.
Summary: Opportunity to trade yesterday’s bullish pin bar at new support. More conservative traders can wait for a close above the 0.9622 key handle before considering a buying opportunity. Key resistance from current levels come in at 0.9622, 0.9747 and 0.9880.