Dovish RBA and higher oil prices add further downside pressure on AUD/CAD

AUD/CAD may kick-start another potential downleg sequence at this juncture.

Short to medium-term technical outlook on AUD/CAD

click to enlarge charts

Key Levels (1 to 3 weeks)

Intermediate resistance: 0.9080

Pivot (key resistance): 0.9140

Supports: 0.8995 & 0.8905

Next resistance: 0.9330

Directional Bias (1 to 3 weeks)

Bearish bias below 0.9140 key medium-term pivotal resistance for another potential downleg sequence to target 0.8995 follow by the recent range support of 0.8905 (swing low areas of 07/30 Aug) in the first step.

On the other hand, a clearance with a daily close above 0.9140 invalidates the bearish scenario for a continuation of the corrective rebound in place since 07 Aug 2019 towards the major resistance of 0.9330 (50% Fibonacci retracement of the major downtrend from Nov 2018 to 07 Aug 2019 low & upper boundary of the major descending channel from Mar 2018 high).

Key elements

  • The recent 256 pips rebound from its 07 Aug 2019 low of 0.8869 has stalled at the upper boundary of a medium-term descending channel from 17 Apr 2019 high of 0.9615.
  • The medium-term descending channel resistance of 0.9140 confluences closelywith a Fibonacci cluster; 38.2% retracement of the medium-term downtrend from 17 Apr high to 07 Aug 2019 low and 1.382 projection of the recent rebound from 07 Aug low to 08 Aug high projected from 30 Aug 2019 low.
  • The 4-hour RSI oscillator has staged a bearish breakdown from a significant corresponding resistance after it hit an extreme overbought level on 13Aug 2019. These observations suggest the revival of medium-term downside momentum in price action.

Charts are from eSignal

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.