CAD, Aussie and Gold Weekly Update - May 06 close

USDCAD

The daily double bottom was confirmed by a triple bottom formation on the weekly charts ending with a huge bullish engulfing candle. Price went well above our conservative targeted level at 0.9600, reaching 0.9710 and closing above the daily SMA34 with a long-legged doji with a 50% retracement on the previous weekly swing low. If this resistance at 0.9720 holds, we would be back towards the middle line of the daily Bollinger bands for a retest of the broken resistance at around 0.9570, then next target would be a retest of the lows around 0.9450.

On the other side, here’s a bullish scenario that could come into play shortly provided the resistance at 0.9720 is clearly broken: a projection of the head of the inverted Head and Shoulders pattern to 0.9880/90 (conservatively targeting the round number 0.9800), with potential for a retest of the next resistance zone at 0.9955/75.

AUDUSD

The Aussie was heavily bearish last week and retraced to the 38.2% Fibonacci level, finally closing at the level of the previous week’s lows. All our targets were hit, and the support area at 1.0580 was pierced, however price came back to the upside recovering all its Thursday losses, making a 50% retracement on the whole week’s move and finally closing below the 38.2% Fibonacci level, exactly at the middle line of the daily Bollinger bands.

Price has been slowly ascending since then and forming a pennant on the 4-hour charts. I would favor a continuation of the bullish trend for a second attempt at early May double-topped highs, and a projection of Friday’s swing high from the support found at the round level 1.0700/10 would bring us to around 1.0970/80 in the following days. The pair is now in a slowly ascending accumulation phase which has been contained by the 1.0800/20 level (hourly SMA200). An extension on the previous 4-hour swing high would give us a target around 1.0900/10 at the upper band levels and 138.2% Fibonacci. There is some additional resistance at the 127% level (1.0875/80).

XAUUSD (GOLD)

Gold effectively retraced and retested the break of the upper line of the weekly wedge, at 1500.00/1480.00 as expected, making a new low at around 1460.00. I think the behaviour of this pair will be quite similar to that of the AUDUSD, where we could expect another attempt at the highs(1580.00) before an eventual continuation of a bearish correction. The 50% upwards retracement has already been reached but we are presently trading below the resistance zone.

Should we fail to clearly cross back the 1500.00 psychological level (at the moment price is hovering a dozen pips above and below with little momentum), we could expect a further retracement to the 138.2% extension on this bearish swing, towards 1420.00.