Daily Price Action
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AUDCAD Potential Head and Shoulders Forming

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Before we get into today’s commentary, I want to point out that tomorrow is FOMC day, so be sure to take that into consideration when evaluating trade setups. In fact I don’t advise taking on any additional risk between now and tomorrow’s New York close.

First up today is AUDCAD, a pair that formed a large bearish pin bar as a result of last week’s price action. The level that caused this reaction is marked by channel resistance dating back to early 2013.

There are quite a few patterns and levels that we need to be aware of with this market. We have a weekly descending channel as well as a wedge formation, which shows trend line support coming in from the 2010 low.

AUDCAD weekly chart:

AUDCAD weekly forex chart

If we move down to the 4 hour chart, we have a potential head and shoulders pattern forming. In order to confirm the pattern we’ll need a close below neckline support at .9778. If the pattern confirms, we could see an extended move to the downside with a measured objective around .9520.

Summary: Wait for a break of neckline support at .9778 on a 4 hour basis. Near-term support comes in at .9709 and .9590 with a measured objective at .9520.

AUDCAD head and shoulders on 4 hour forex chart

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