The Aussie/ Loonie (AUDCAD) pair begun the year on a bright note, rising over 600 pips since the January 10 lows. Technically, price completed a bullish shark harmonic pattern on the daily chart on January 10 which showed that the bulls would take charge. Price has however entered a region that could attract the bears. As we will soon see, an AUDCAD Harmonic Analysis will show us likely reversal zone. We will then get possible entry and exit points for a short trade setup.
19 March, AtoZForex – After forming the bullish harmonic pattern back in January, a short-term up trend ensued. Since then, price entered a 52-day rally, and blew past parity (1.000) level. Consequently, price hit a 4 month high late last week. AUDCAD closed at 1.0281 last week, and is only 100 pips away from a key level resistance at 1.0300/50.
AUDCAD Weekly Chart (click to zoom)
The Weekly chart shows the 1.0300/50 key level which is the 2016 high. As it is the highest level price traded throughout 2016, it is likely to re-attract bears. The market has memory, and with price trading close to this resistance, traders should watch for a short trade setup. Apart from being the 2016 high, that level also stands as both the 2014 and 2004 highs.
AUDCAD Harmonic Analysis: Possible entry and exit levels
AUDCAD H4 Chart (click to zoom)
On the 4 hour chart, price has completed a bearish butterfly pattern. The pattern begun on March 1 with price trading at 1.025 'X'. Price then dipped 150 pips to form point 'A' at 1.01. Point 'B' was formed at 1.0213 as price rallied 0.76% of XA dip. Price thereafter formed point 'C' on March 9 at 1.0125 level. Price currently is at point 'D', a potential reversal zone which is a 1.27% extension of BC leg.
AUDCAD 30 Minute Chart (click to zoom)
The 30 minute chart also displays a bearish butterfly pattern. This forms a CONFLUENCE of events as multi-time frame harmonic patterns point to a possible turn in price at a key resistance level. A sell limit order might be placed at 1.0300 level with a 150 pip stop at 1.045 and a 300 pip target at 1.0100. This is a 2:1 reward to risk harmonic pattern trade setup.
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