Update on AUDCAD

Entry order hit at 1.0468. Original stop below the range has now been moved to 1.0405, just below 50MA and an uptrendline on 4 chart.

As expected, this pair has stalled above 1.0500 area peaking at 1.0539. To be clear, the pair is still within a daily/weekly congestion area and a stall on that area is logical. However, daily RSI is diverging (left section of the first chart) and if you zoom in at a 4h chart, you will notice that a min target of channel extension appears to have been met and the pair came back down with a perfect bearish Shooting Star.

In terms of fundamentals, expectations are for the RBA to cut interest rates as the local economy slows down. The only impediment to rate cuts has been higher inflation. If it slows, the RBA cuts and AUD therefore weakens. Tomorrow (Wed) 1:30am London time, latest inflation data is on dock. Mean forecasts are for a slight slowdown in inflation. If inflation slows faster, the stop loss will most likely be hit as AUD tanks. But if inflation prints as expected or even higher, ahead we go is the motto for AUDCAD, I guess.

I mentioned to many negatives for this trade but that is OK with me. When everything looks bad is the time to do the opposite and in my experience I have seen a lot of breakouts from the range when price consolidates for a few days just beneath the top of the range only to power ahead and never look back for the next few weeks.

Therefore, the recent daily channel/consolidation may serve as a harbinger of the large measured move to come. Unless proven wrong (stop loss being hit), I am willing to give this trade a leeway to prove itself.