AUDCAD finds buyers around 0.9554 for the forth day in a row
Australian Dollar/Canadian Dollar (AUDCAD) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
AUDCAD finished the month 2.22% higher at 0.9579 after tanking 78 pips (-0.81%) today on high volume. This is the biggest single-day loss in over four months. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (AUDCAD as at Jul 31, 2020):
Friday's trading range has been 143 pips (1.48%), that's far above the last trading month's daily average range of 64 pips. Weekly volatility is also higher, being slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for AUDCAD. Prices continued to consolidate within a tight trading range between 0.9514 and 0.9697 where it has been caught now for the whole last trading week.
In a volatile session, prices traded above the previous day's high as well as below the prior day's low, forming a bearish Outside Bar. Even with a strong opening the forex pair closed below the previous day's open and close, forming a bearish Engulfing Candle. The last time this candlestick pattern showed up on July 8th, AUDCAD actually gained 0.30% on the following trading day. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical support level at 0.8957 (S1). The pair was bought again around 0.9554 after having seen lows at 0.9556, 0.9561 and 0.9521 in the last three trading sessions. Obviously there is something going on at that level.
Crossing below the upper Bollinger Band, prices have lost at least some of their upward momentum in the short-term and might now be heading back down towards the mean of the Bollinger Bands at 0.9514.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Selling could speed up should prices move below the nearby swing low at 0.9489 where further sell stops might get triggered. With prices trading close to this year's low at 0.0418, downside momentum could accelerate should the market break out to new lows for the year. Trading close to May's low at 0.9008 we might see further downside momentum if potential sell stops at the level get activated.
Among the 15 market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "High close to prior three Highs" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for AUD/CAD. Out of 97 times, AUDCAD closed higher 58.76% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 69.07% with an average market move of 0.70%.
With five out of the seven Major FX Pairs closing lower today, the ones that stand out on the negative side are NZDUSD losing -1.04% and AUDUSD closing -0.72% lower. On the flipside the best performers have been USDJPY closing 1.12% higher and USDCHF gaining 0.48%. Looking at the other Minor FX Pairs and Crosses, the winners of the day have been USDZAR surging 1.87% and GBPZAR closing 1.79% higher. The worst performers of the day have been NZDCAD tanking -1.15% and NZDHKD closing -1.05% lower. Read more