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Short-Term AUD/CAD Range Bound Scalp

Short-Term AUD/CAD Range Bound Scalp

2011-05-10 18:21:00
Michael Boutros, Technical Strategist
Share:
Short-Term_AUDCAD_Range_Bound_Scalp_body_Picture_2.png, Short-Term AUD/CAD Range Bound Scalp

The AUD/CAD pair presents traders with a short-term scalping opportunity between 1.0400 and the 1.03600 as the pair continues to range amid a quiet economic docket. With dollar strength prevailing throughout the US trading session, the aussie and the loonie continue drift sideways ahead of economic data later this week. Relative strength also remains neutral with a steady read between the 45 and 50 levels.

Scalps between 1.0400 and 1.0360 are favored with our biased leaning towards the Canadian dollar. A break of the 1.0400 sees additional short entry points at 1.0410, with stops set just above the 1.0440 resistance level. A break below 1.0360 sees additional long entry points at 1.0340, with a break of the 1.3030 resistance level voiding this particular scalp. Note that the grid below shows the 23.6% and the 38.2% Fibonacci levels coinciding with the upper and lower bound trend lines which encompass our scalp channel.

Key Support/Resistance Levels to Watch

Indicator

Timeframe

Level

Fibonacci Extension – 23.6%

Daily

1.0327

Fibonacci Extension – 38.2%

Daily

1.0400

Fibonacci Extension – 50.0%

Daily

1.0460

10-SMA

Daily

1.0342

20-SMA

Daily

1.0258

50-SMA

Daily

1.0050

RSI

Daily

58.69

*Fibonacci Extension taken from the April 5th and May 5th toughs

Event Risk

The time frame for this strategy is rather short with event risk mounting tomorrow as Canada releases the March international merchandise trade figures. Consensus estimates call for a read of 0.4B, up from a previous flat print. The following day, Canada reports on the March new housing price index, with prices expected to soften slightly to 0.3% m/m from the previous read of 0.4% m/m.

Economic data out of Australia will be even more impactful, with the April employment figures on tap. With the recent strong economic data and a surging trade balance out of the continent nation, the RBA may be hastened to move on interest rates as domestic inflationary pressures begin to emerge. A stronger than expected employment print will have traders factoring in future rate hikes from the central bank and may provide the aussie with enough momentum to breach the top of this sideways channel.

Written by Michael Boutros, Currency Analyst for DailyFX.com

To contact the author of this report, please send inquiries to:mboutros@dailyfx.com

You can also follow Michael on Twitter @MBForex

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