AUDCAD: Re-Trying Short Position Once Again
Strategy: Short at 1.0406, Targeting 1.0291
We initially sold AUDCAD at 1.0619 as a way to gain exposure to relative Chinese versus US economic growth expectations – with the North American economy expected to accelerate this year as the East Asian giant slows – and booked profits on the position on June 6 at 1.0197 as prices took out falling channel resistance set from mid-March. An attempt to re-enter the position was stopped out last week.
Positioning now looks attractive to try again. Prices are showing a Bearish Engulfing candlestick pattern below 1.0467, the 61.8% Fibonacci retracement, with negative RSI divergence reinforcing the case for a downside scenario. We will re-enter short, initially targeting 1.0291. A stop-loss will be triggered on a daily close above 1.0467.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com
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