AUD/CAD – Chart Developing


AUD/CAD –  This cross flashed a significant sell signal on Friday. I view short AUD/CAD as a potentially rewarding cross in the weeks and months ahead. This is a cross that can be traded in the spot forex market or using futures contract on a one-to-one basis, although such a trade would be over-weighted to CAD.

The longest-term charts show that AUD/CAD have remained in a broad trading range for many years.




The weekly chart displays several patterns worthy of note. The decline in June 2013 completed a 24-month H&S top pattern. The decline from this H&S has queickly turned into a 41-month descending triangle pattern. This is this pattern that most has my attention. I believe that the completion of this descending triangle would result in a decline in AUD/CAD to the low end of the historical price range at .7600.


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There is reason to believe that the final high within the descending triangle is in place. The sharp decline on Friday  penetrated the Feb 9 and Feb 18 lows, thus completing a 9-week sloping or horn top. This top is completely adequate to warrant a short position. My risk points on a short position are the Feb 25 and Feb 26 highs. I am risking 50 basis points on the trade with an initial target of .9170. An eventual target of .8300 is possible.


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The ideal spot for establishing or increasing adding leverage is in the .9700 zone.
I have no idea what the global marcro factors would need to be for the CAD to substantially gain against AUD. I will leave this question to those of you would this information matters.