CADAUD rockets, gaining 85 pips (0.82%) within a single day on high volume
Canadian Dollar/Australian Dollar (CADAUD) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
CADAUD ended the month -2.16% lower at 1.0440 after surging 85 pips (0.82%) today on high volume. This is the biggest single-day gain in over four months. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (CADAUD as at Jul 31, 2020):
Friday's trading range has been 155 pips (1.5%), that's far above the last trading month's daily average range of 77 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 CADAUD.
In a volatile session, prices traded above the previous day's high as well as below the prior day's low, forming a bullish Outside Bar. Notwithstanding a weak opening the market managed to close above the previous day's open and close, forming a bullish Engulfing Candle. Additionally, one bullish candlestick pattern matches today's price action, the White Candle.
The pair ran into sellers again today around 1.0467 for the third trading day in a row after having found sellers at 1.0465 in the prior session and at 1.0459 two days ago. The last time this happened on July 14th, CADAUD actually gained 0.33% on the following trading day.
Crossing above the lower Bollinger Band, prices have lost at least some of their downward momentum in the short-term and might now be heading back up towards the mean of the Bollinger Bands at 1.0512.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Buying could accelerate should prices move above the close-by swing high at 1.0539 where further buy stops might get triggered. Trading close to May's high at 1.1101 we could see further upside momentum if potential buy stops at the level get activated.
Among the 11 market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Very Strong Up Move" stand out. Although it is usually interpreted as bullish, it has actually shown to be bearish for CAD/AUD. Out of 136 times, CADAUD closed lower 56.62% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after three trading days, showing a win rate of 59.56% with an average market move of -0.06%.