Is AUDCAD in the process of topping ahead of the RBA rate decision or is this mere consolidation before the next leg up?
Of course, the answer to that question will remain elusive until one of two levels fails.
But before we get to that I want to mention that AUDCAD isn’t a pair I trade often. In fact, I think this is my second commentary on the pair this year.
The reason I tend to stay away from AUDCAD is that of the pair’s choppy price action. However, a combination of the higher time frames and a distinct technical pattern can make for a favorable opportunity with the right catalyst, even in a relatively choppy environment.
The catalyst I’m referring to is the upcoming RBA rate decision at 12:30 am EST.
Now, as is the case with any major event risk, I have no intention of trading the Australian dollar before or during the decision. I also don’t intend to make any conclusions here until tomorrow’s close at 5 pm EST, so there’s plenty of time for the dust to settle.
The potential double top I have my eye on formed on the 4-hour chart between the 13th and 26th of July at the 0.9970 handle. The neckline for the pattern is the July 21st low at 0.9730, which means the objective comes in at the post-Brexit low of 0.9490.
But here’s the most important part…
The formation below is only an idea. It will take a close below the neckline at 0.9730 to confirm the topping pattern and expose the downside objective.
On the flip side, there’s always the chance that the price action over the past three weeks is the pair’s way of gearing up for a push above recent highs.
I suspect we’ll have an answer one way or the other given the upcoming RBA decision. But until a clearer picture develops, I will remain on the sidelines.
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