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Price Action Setups: AUDCHF, AUDUSD and USDCAD

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I’m starting with AUDCHF over AUDUSD today simply because I think in terms of technical patterns, AUDCHF is the most interesting.

The pair has been stuck in this channel of consolidation since mid June. One thing I love about patterns like this is that they’re terminal, which means they occur at extremities where a breakout is certain. The longer the consolidation, the more severe the breakout is in most cases.

There isn’t much to do at the moment but wait and watch. A 4 hour close outside of the top or bottom of this pattern will be our clue. We can then wait for a retest of the level just as we would with a horizontal support or resistance level.

I will say that this channel is technically a bullish pattern as the market has been in an uptrend since January. But again, only a 4 hour close outside of the channel top will signal that the market is likely to move higher.

audchf 4 hour forex chart

Next on the list is AUDUSD. Similar to AUDCHF, this market is caught in a channel, only this time it’s sideways consolidation.

Although a price action signal at the upper or lower extremities of the channel would be tempting, I’m mostly interesting in a breakout and retest. A break to the upside would be ideal as the pair has been trending higher for some time.

audusd forex daily chart

USDCAD is by far my favorite level at the moment. Not only is it a nice horizontal level to watch for a potential buy signal, but the pair also put in a bullish outside/engulfing bar on Friday. I don’t use outside bars as an entry signal, however I do use them as a signal that the trend may be changing and then look for price action to trade with the new trend.

It’s important to note that outside bars are only meaningful if they occur at the right level and in favorable market conditions. As for this outside bar, it has all of the ingredients for a reversal.

The year open for USDCAD is 1.063. On my chart the low of the daily outside bar is 1.06295. That’s no coincidence as the year open for any pair often acts as support or resistance.

Furthermore the pair also came into trend line support from 2012 (see last chart). As you can see, this has all the makings of a proper reversal.

One last note. Although I’m watching 1.0693 I’m not ruling out the possibility that the pair has found support at current levels. There are several daily highs from December of last year that are coming into play and acting as support at current prices.

usdcad 4 hour forex chart

USDCAD trend line from 2012

usdcad daily forex trend line

 

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