AUD/CAD traded higher on Wednesday, breaking above the 0.9643 barrier, which could be seen as a neckline of an inverted “head and shoulders” formation. That said, the advance was stopped near the 200-EMA on the 4-hour chart, and thus, we prefer to see a clear move above that moving average before we start examining the completion of the bullish reversal. For now, we will adopt a cautiously-positive stance.
If indeed the rate climbs above the 200-EMA, the bulls may get encouraged to push the battle towards the 0.9720 territory, which provided resistance on March 18 and 22. If they are not willing to give up near that zone this time around, we may see extensions towards the peak of March 11th, at around 0.9795.
Taking a look at our short-term oscillators, we see that the RSI lies above 50, points up, and looks to be approaching the 70 line. The MACD runs above both its zero and trigger lines, pointing north as well. Both indicators detect upside speed and support the notion for further advances in this exchange rate.
Now, in order to abandon the bullish case and start examining whether the bears have gained the upper hand, we would like to see a slide below the 0.9533 barrier, marked by the low of Apr. 12. This will confirm a forthcoming lower low on the 4-hour chart and may pave the way towards the low of Apr. 1, at 0.9490, or towards the low of Dec. 7, at 0.9457. If neither level is able to stop the decline, the bears may take the rate all the way down to the 0.9405 area, defined as a support by the low of Nov. 5.