CADAUD finds buyers around 1.0908 for the forth day in a row
Canadian Dollar/Australian Dollar (CADAUD) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
Moving higher for the 2nd day in a row, CADAUD ended the week -1.14% lower at 1.0924 after edging higher 8 pips (0.07%) today. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range.
Daily Candlestick Chart (CADAUD as at May 22, 2020):
Friday's trading range has been 38 pips (0.35%), that's slightly below the last trading month's daily average range of 12039 pips. Weekly volatility is also lower, being way below the market's average weekly trading range. The longer-term, monthly volatility is currently higher than usual for CADAUD. Prices continued to consolidate within a tight trading range between 1.0889 and 1.0985 where it has been caught now for the last three trading days.
During the whole day, prices traded within the prior day's range, unable to trade above the previous day's high or below the prior day's low forming an Inside Bar.
Prices are trading close to the key technical resistance level at 1.1307 (R1). CAD/AUD was bought again around 1.0908 after having seen lows at 1.0897, 1.0889 and 1.0947 in the last three trading sessions. Obviously there is something going on at that level.
Crossing above the lower Bollinger Band, prices have lost at least some of their downward momentum in the short-term and could now be heading back up towards the mean of the Bollinger Bands at 1.0999. The last time this happened on April 10th, CADAUD actually lost -0.11% on the following trading day.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Buying might speed up should prices move above the nearby swing high at 1.1084 where further buy stops could get activated. Selling might accelerate should prices move below the close-by swing low at 1.0889 where further sell stops could get triggered. As prices are trading close to May's high at 1.1101, upside momentum might speed up should the FX pair mark new highs for the month.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "High close to previous three Highs" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for CAD/AUD. Out of 57 times, CADAUD closed higher 61.40% 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 47.37% with an average market move of 0.21%.