AUD/CAD...lets get curious
I wanted to tackle a new pair today and the AUD/CAD seemed like a fun pair to dig into. I started with the largest timeframe or the monthly chart and worked into a daily timeframe. I found some interesting patterns on both charts that I felt I should share. I want to watch this pair develop further but I am currently leaning on shorting the pair. The technicals are showing a bias towards the short side while the fundamentals are mixed.
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A practical way of looking at the two countries fundamentals includes looking at the countries primarily roles and there locations to growth. As close to China as Australia is; Australia is limited to air and sea transport while Canada also has rail and road. As the cost of everything rises, having additional transport options gives Canada an efficiency advantage. Australia’s advantage is that it is geographically closer to the growth powerhouse of China. The next couple of years, both the US and China are expected to decline there growth outputs. With China slowing there growth outputs, China will be better positioned to buy commodities at cheaper prices. This may force Australia to further compete and thus be forced to weaken there currency. Both countries are highly influenced by the "west" yet Australia is the furthest from the west. Australia’s geographic distance to the western world amid it’s close relationship to the western world carries more risk than “linked up Canada”. With a decent longterm fundamental picture in mind, we will be watching the technicals on shorter timeframes to confirm or disconfirm future trades.
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Replies to This Discussion
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Permalink Reply by David Petrunic on
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Permalink Reply by Jide on
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Based on this analysis when do u think the short target would be attained? A year's time
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Hello Jide,
Good Question as we are looking at longterm charts. I was out from works yesterday but was glad to see your interest today.
I am posting a 180min chart to illustrate current setup potential and also a monthly chart to illustrate further reason to look short beneath the .8850 level.
Check them out--David
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After reviewing the Monthly chart and seeing the current perfect 62% retracement, I went to check the other retracements in the past on that monthly chart. While the market loves a 62% retracements and will hit the 62% level a majority of the time there are often observable reasons why it will push past the 62%. The mosthere nearby untested levels can serve as reason for price to test a further than 62% retracement level
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Jide said:Based on this analysis when do u think the short target would be attained? A year's time
Jide,
Regarding time.
If you look at the monthly chart, the pair can move fast as the preceding move down from .9837 to .7175 only took 4 months; so if the momentum is done at the .8832 high(.618 retrace level) and price holds beneath the .8832 level then price may only take 2-3 month to retest low at .7175.
Best Regards,
David
When
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