AUD/CAD traded lower today, after it hit resistance slightly below the 0.9250 zone, marked by yesterday’s high and the inside swing low of Oct. 27. The slide was stopped once again slightly above the key territory of 0.9200, which provided resistance between Sept. 26 and Oct. 12. Overall, the short-term outlook looks to have turned negative upon the dip below 0.9250 on Tuesday, but in order to get confident on larger declines, we would like to see a dip below 0.9200.
If, indeed, the bears are strong enough to push the action below the 0.9200 zone, we would expect them to dive towards the 0.9150 territory, defined as a support by the low of Oct. 18. If they don’t stop there, then we may see a test at 0.9133, near the lows of Oct. 6 and 13, where another break could pave the way towards the lows of Oct. 8 and 1.
Shifting attention to our short-term oscillators, we see that the RSI, already below 50, has turned down again, but the MACD, although below both its zero and trigger lines, shows signs of bottoming. Both indicators detect downside speed, which supports the notion for further declines, but the fact that the MACD shows signs of bottoming makes us careful over a possible small bounce before the next leg south.
On the upside, we would like to see a rebound back above 0.9250 before we start examining a decent recovery. This may not be signal the initiation of an uptrend, but it would confirm a forthcoming higher high on the 4-hour chart. The bulls may then get encouraged to shoot for the 0.9282 zone, marked by Monday’s low, the break of which could see scope for extensions towards Tuesday’s high of 0.9320.