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AUDCAD: Double Top or Readying to Breakout on RBA Decision?

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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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AUDCAD potential 4-hour double top

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4 comments
Shaon Bhuiyan says

Both ways this is a good opportunity. I had short at AUDCHF last week and took 2/3 of the profit today cause of tomorrow 🙂 Best of luck.

Reply
    Justin Bennett says

    Shaon, that may be true, but I’m only interested in a move lower given the clarity of the support levels involved.

    Reply
That One Guy says

Yeah look at the current price action coming off those highs. We had strong trend down. Followed by this current push up, which looks a bit weak.Will be interesting to see how this plays out.

Reply
    Justin Bennett says

    It will, indeed. The retest on July 26th that you’re referring to was, in fact, a bearish pin bar on the daily.

    We’ll see soon enough if it can offer follow-through.

    Reply
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