Hello traders! AUD/CAD currency pair is yet again under selling pressure. It seems like it is about to continue the 5th wave down, which in fact could be final. After that, there must be some sort of correction and potentially very strong.
But how far down this pair can go?
On the daily chart, the price is clearly trending down and rejected the downtrend trendline (marked with red arrow down). At the same time, 200 Exponential Moving Average is being respected by the market, while there ware at least two clean bounces (marked with red circles).
Overall its a very bearish sentiment that should push the price much lower. Fibonacci retracement level applied to the last corrective wave up shows that the 361.8% retracement level is right at the psychological price – 0.8200. This could be the downside target for sellers, in case the price will be moving lower.
On the 4 hour chart, we can see a strong resistance area between 0.9000 and 0.9050. This is a strong area of supply and it is possible that price can re-test this area once again, prior to moving lower. But only break and close above 0.9050 would invalidate bearish outlook.
But while it is still a bearish trend, let’s have a look at all the support levels. Another Fibonacci retracement indicator applied to the corrective wave up, where 200 EMA was rejected, shows that 527.2% corresponds to our previously used Fibonacci level at 361.8%. Therefore, key support is located at 0.8200. But other retracement levels could also be the final point of the downtrend and should be watched closely for any sort of bounce or rejection.
Bias: Strongly Bearish while below 0.9050
Potential Resistance Zone: 0.9000-0.9050
Potential Targets: 0.8604, 0.8506, 0.8455, 0.8357, 0.8305, 0.8207
Have a profitable trading!