Now in its fifth month of consolidation, AUDCAD continues to defy the selling pressure that would ultimately see it close below the 0.9410 handle.
But with a level that has been tested on numerous occasions over the past twenty months, the big question remains – how much longer can the bulls support these prices?
As John Keynes once said, “The market can stay irrational longer than you can stay solvent.”
In other words, don’t bet your money on an idea that has yet to materialize in an attempt to outsmart the market. It’s a fool’s game and one that simply isn’t necessary to make consistent gains in the Forex market.
Back to AUDCAD. The pair has made several intraday moves below 0.9410 only to close the day back above the key level. And while a break here may seem long overdue, it’s important that we remain patient and let the market come to us.
Some traders may have seen these recent intraday breaks and become anxious, thinking that they might miss the move unless they jump in right away. But if you refer to my recent lesson on retests of broken levels, you will quickly notice that a noteworthy characteristic of AUDCAD is the way that each new session often overlaps the previous session.
This means that the odds of being able to get in on a retest of 0.9410 as new resistance (after a close below it, of course) is extremely high. With that in mind we can sit back, relax, and wait for a daily close below the level before further consideration.
Note: The docket is packed with China and Australia event risk this evening between 9pm EST and 12:30am EST tomorrow, so be sure to take this into account in case we get our break at today’s close.
Summary: Wait for a daily close below 0.9410 and then watch for a selling opportunity on a retest of the level as new resistance. Key support comes in at 0.9170 and 0.8800. Alternatively, a daily close back above 0.9410 would leave us on the sidelines until a more favorable opportunity presents itself.