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AUDCAD Reversal Pattern Sets Up for Next Week

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It’s no secret that the Canadian dollar has been outpacing its counterparts of late. On Tuesday, I mentioned an area on GBPCAD that was likely to accelerate selling pressure if broken. That level gave way shortly thereafter, and the pair is now lower by nearly 300 pips.

Just yesterday I covered the bear flag on USDCAD. Several hours after that commentary went out the pair dropped below the 1.30 handle on a daily closing basis and is now off of those levels by more than 60 pips.

As they say where I’m from, if it ain’t broke, don’t fix it.

To apply this line of thinking to Forex, if you see a currency beginning to strengthen or weaken across the board, look around to see where you can exploit it rather than searching elsewhere. In other words, take an inventory of the technical patterns for that particular currency to see where you can put your trading edge to work.

With this in mind, let’s review another CAD pair I mentioned at the beginning of the month. While the ascending trend line on AUDCAD is still intact, yesterday’s bearish engulfing pattern should be cause for concern if you’re long.

The massive 140 pip daily candle engulfed the previous three sessions and also put the pair back below the March high at 1.0050. This combination leaves AUDCAD looking vulnerable going into next week.

However, I’m not as interested in trading the bearish engulfing pattern as I am in a potential break below ascending channel support. With four touches since its inception in June (today being the fourth), this is one level that I’ll be keeping a close eye on as we head into a new week of trade.

A break below support would target 0.9730 followed by the post-Brexit low at 0.9490. Do note that there is also minor support near the August 2nd low of 0.9830.

Want to see how we are trading this setup? Click here to get lifetime access.

AUDCAD ascending trend line on the 4-hour chart

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5 comments
Harald Cermak says

Hi Justin.
Now its time for me to say to you pretty thanks for your always interesting and mostly
correct analysis of forex pairs. I really appreciate all of your stuff and i wanna to join
your pa community witj its course in the next days. I know a lot of pa from others too but i have to say you do the most beside al brooks and so on. Brooks is interesting stuff because for him there is always anything information.
Have a good time and thanx again for yours.
Greetz from vienna again Harald

Reply
    Justin Bennett says

    You’re welcome, Harald. I look forward to having you as a member. Let me know if you have any questions.

    Reply
Shaon says

Haters going to hate no matter what you decide. I just ignore them unless they have a strong logic.
I closed my short entry with 1100+ Pips (3+ weeks) on GBPJPY today while most of my trading friends suggested to close the short at 1.35 level! I would have missed another 400+ Pips!

Reply
    Justin Bennett says

    Shaon, maybe I missed something, but I don’t think anyone was hating. The point I was trying to make is that some believe crosses like AUDCAD are not worth trading. And of course, everyone is interested in the EURUSD and the GBPUSD.

    By saying “don’t fix it,” I was implying that traders should focus on the real opportunities in the market, regardless of where they crop up. In other words, don’t trade a pair just because everyone else is, do it because a real opportunity exists.

    Reply
      Shaon Bhuiyan says

      Thanks Justin. I think It was my mistake.

      Reply
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