Great risk to reward play forming on AUD/CAD with AUD looking to strengthen against the USD as the Iron Ore price strengthens and oil dropping effecting the Canadian Dollar.

AUD/CAD

AUD/CAD has potential for price to break above August highs when you factor in the strong Iron Ore and Gold bull trends, vs the Oil starting to drop off sitting below $40us per barrel.

AUD/CAD

 

Key Points:

  • Price crosses September trend line
  • Consolidation above trend line
  • We have the 21 EMA crossing above the 50 EMA
  • Price sitting on 38.2% Fibonacci retracement
  • RSI to test above 50 territory

 

Caution:

  • 50 EMA and 200 EMA will act as resistance, so risk management is important if failed.

 

Key Levels:

Support – 0.95105, 0.95000

Resistance – 50 EMA, 200 EMA, 0.95500, 0.95770, 0.95950

 

Entry Zone:

Optimal entry provides the greatest reward to risk ratio while supporting entry is a zone for reversal signals.

Optimal Entry – 0.95200

Supporting Entry – 0.95300

Candle Reversals for entry

  • Bullish Hammer
  • Bullish Engulfing
  • Bullish PiercingCandlestick

The Risk:

As traders, it is your job to mitigate the risk and only trade structures that provide high probability and great reward to risk ratios.

If you are not comfortable with defined exit levels, experiment with Moving Averages to help set solid exit rules to protect your capital.

IF: Price breaks below 0.95105 – this would suggest the structure is not in our favour and would be wise to reduce exposure or close the trade until a solid signal gives us reasons to re-enter.

Reward / Reward Targets:

Optimal Entry 0.95200 – Target 1 0.95500 = 2.2x Reward to Risk

Optimal Entry 0.95200– Target 2 0.95770 = 4x Reward to Risk

Optimal Entry 0.95200– Target 3 0.95950 = 5.5x Reward to Risk

 

Supporting Entry 0.95300 – Target 1 0.95500 = 1x Reward to Risk

Supporting Entry 0.95300 – Target 2 0.95770 = 2x Reward to Risk

Supporting Entry 0.95300 – Target 3 0.95950 = 2.7x Reward to Risk