After a volatile trading day yesterday, followed by strong selling during the Asian morning today, AUD/CAD is now balancing below its medium-term upside support line, drawn from the lowest point of October 2018. This raises concerns over the pair’s potential to move higher in the short run. For now, we will target lower levels, even though we might see a bit of retracement back up, before another leg of selling.
If AUD/CAD travels a bit higher but fails to drive back above the aforementioned upside support line, this could be another sign of weakness that could force more bulls to abandon the pair. This would be the cue for the sellers to step in and push the rate down towards the next potential area of support at 0.9455, marked by the low of the 8th of January. Of course, if this area just acts as a temporary pit-stop for the bears, a further drop could set the stage for a test of the 0.9430 obstacle, or even the 0.9410 zone, marked by the low of the 4th of November 2018.
On the other hand, a sudden sharp move back above the previously-mentioned upside support line could make the bears worry. If the rate continues to rise and gets above the 0.9575 barrier, this is when we could become more confident of seeing AUD/CAD moving further up. Such a move may clear the path towards the high of the 31st of December, at 0.9630, a break of which could lead the pair to the next possible resistance zone, at 0.9672, marked by the intraday swing high of the 19th of December.
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