The price oscillations between these 2 commodity currencies can either be traded, or used to assess strong/weak relationships of other AUD and CAD pairs.
I have used Hurst Cycles, which comprise of a cantered moving average with envelopes, to try and identify approximate cycle time and strength. Because they are cantered they have been shifted back 1/2 of their wavelength to create a 'true moving average' of both price and time. The issue however is due to the MA being displaced in the past we have to extrapolate the cycle by hand (which I have done with the medium-term orange cycle).
As the long-term cycle looks strong I expect to see higher highs over the coming months, bot for the medium-term I expect to see lower-lows with the orange cycle bottoming sometime around the end of May.
The break below the bullish trendline was highlighted in the daily report over 1 week ago and broken beneath the April swing low to confirm a change in trend.
Price remains above the 50-day eMA but below the Monthly Pivot. The horizontal S/R at 1.02238 is the low of Feb '13 which provides confluence of resistance. This may encourage sideways trading and for either a bearish flag or pennant to form.
We may witness a deeper pullback towards 1.0238 which may provide a better shorting opportunity. Ideally we will see a bearish sell-signal such as a Hanging Man or Shooting Star close below Monthly M1, after a failed attempt to break above this level, and take a swing trade short.
The target is parity because not only is it an obvious round number but is also the 38.2% retrace and Monthly S2.
SUMMARY:
- Long-term cycles still bullish
- Medium-term cycle momentum has slowed and expect a cycle trough around the end of May
- Strategy is to short pullback from the near-term cycle and target parity, and reassess price and targets near this level.