AUD/CAD traded higher during the European morning Monday, breaking above the resistance (now turned into support) barrier of 0.9533. The move appears to have signaled the completion of a double bottom formation on the 4-hour chart, and thus, we will start examining the case of a bullish reversal.
If the bulls are willing to stay in the driver’s seat, we may see them targeting the 0.9575 hurdle soon, the break of which may extend the recovery towards the 0.9615 zone, marked near the inside swing low of Apr. 22. If that area is not able to halt the advance either, then we may see the buyers aiming for the 0.9654 level, marked by the inside swing lows of Apr. 15 and 19.
Shifting attention to our short-term oscillators, we see that the RSI rebounded from near its 50 line and points up again, while the MACD lies above both its zero and trigger lines, pointing up as well. Both indicators detect rising upside speed and support the case for this exchange rate to continue drifting north for a while more.
On the downside, in order to consider the resumption of the prior downtrend, we would like to see a dip below the key support area of 0.9450, which prevented the rate from falling further from Apr. 30 until May 7. Such a dip would confirm a forthcoming lower low on the daily chart and could pave the way towards the 0.94000 zone. Another break, below 0.9400, could see scope for declines towards the 0.9355 obstacle, defined as a support by the low of Nov. 4 .