August 5, 2021 13:35:13
AUD/CAD downtrend moderates
Since topping out in late February just below the key psychological 1.00 level, AUD/CAD fell in a bearish channel. The pair then tracked sideways in a range between 0.9260 and 0.9380, more or less, since mid-May until late July, held up by a long-term Fib level at the bottom part of the range. Long-term bearish momentum then resumed with prices dropping below 0.92.
This down move pushed short-term indicators into oversold territory and the pair has bounced quite strongly back to the lower part of the recent range which now acts as resistance to further upside at 0.9250/60.
Weekly oscillators remain firmly bearish even though shorter-term indicators have moderated. Yesterday’s price action also warns that sellers are still in control with a bearish pin bar failing at the 50-day SMA. First target for the bears is last week’s cycle low at 0.9144/45 with the 50% retrace level of the March 2020 to Febarury 2021 gains at 0.9031 further out. Stops can be placed at the spike high from yesterday above 0.9311. The weekly close is key here as more AUD strength may point to upside risk and a false breakdown on the weekly chart.
GBP/AUD pauses in solid uptrend
This pair bottomed out with a spike low last December and the January low at 1.7415. GBP/AUD then tracked sideways between 1.78 and 1.80 before bullish momentum picked up from mid-May in a rising channel. The daily RSI entered overbought territory on the bullish burst in later July and prices touched the upper Keltner band too, signalling that a pullback was near.
Since the high last week at 1.8972, the pair has retraced just short of a key Fib level at 1.8735. We printed an “inside day” yesterday and it looks like we might do so again today. This candlestick occurs when one trading day’s high and low falls within the range of the prior days’ highs and lows. While recognised as a neutral sign, the long-term uptrend is still strong so bulls should go hunting for the cycle highs again with stops below this week’s low at 1.8756.
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