AUD/CAD Buyers react to Key One-Year Uptrend Line

Market Overview

Thursday’s market dynamics have witnessed renewed optimism among Australian dollar buyers, supported by encouraging macroeconomic data from China. The Chinese stimulus package, aimed at bolstering domestic consumption, alongside a significant 12.7% rise in Chinese exports, provided a tailwind for the Australian dollar. The market appears to have shrugged off Australia’s recent trade balance dip, which fell to a four-year low, primarily driven by a decline in exports. Traders, instead, focused on China’s role as a key driver for Australia, reinforcing the AUD against the commodity-driven Canadian dollar.

The Canadian dollar, on the other hand, remains largely tethered to crude oil price movements, and sentiment ahead of key labor data remains cautious. This divergence in economic drivers for the two currencies has made AUD/CAD a focal point of interest for traders attempting to balance risk against potential opportunities.

Technical Analysis

In the daily chart, AUD/CAD responded with significant buyer enthusiasm upon testing its one-year ascending trendline. Buyers pushed the price upwards, challenging the immediate resistance at 0.92009. If they manage to secure a sustainable break above this level, it will complete a Bollinger W-pattern, signaling consolidation in the upper half of the Bollinger Bands. Such a move will place the subsequent resistance levels at 0.92361, 0.92809, and eventually 0.93304 in focus for potential upward targets.

However, in a contrary scenario, sellers could regain control should the pair fail to hold above current levels, especially if it descends below 0.91514. In such a case, further selling pressure would expose the pair to the next support level at 0.90714. The interaction with these levels will be crucial in determining whether the bullish momentum can hold or if bears will seize the opportunity to drive the price lower.

Oscillators Confirmation

Indicators present a mixed outlook. The RSI is currently suggesting positive momentum, hovering above the neutral level, which underscores a slight bias towards the bulls. On the other hand, the MACD remains in the negative territory, highlighting lingering downward pressure that may affect any attempts for a significant breakout. Meanwhile, moving averages are showing a predominantly upward slope, adding to the broader bullish sentiment in the market.

Key Technical Levels Overview

Resistance Levels:

• Resistance 1: 0.92361
• Resistance 2: 0.92809
• Resistance 3: 0.93304

Current Price: 0.92095

Support Levels:

• Support 1: 0.91514
• Support 2: 0.90714

Key Events to Monitor

The upcoming Canadian unemployment rate, due on Friday, is expected to be a significant driver for the CAD. Market participants will closely monitor this data release to gauge the state of the Canadian labor market and its subsequent impact on the Canadian dollar. This, in combination with broader risk sentiment and ongoing developments regarding Chinese economic measures, is likely to play a decisive role in dictating AUD/CAD price action for the rest of the week.

Conclusion

AUD/CAD buyers appear determined to sustain their recent gains, aiming to break through critical resistance levels after rebounding from the one-year ascending trendline. The upcoming Canadian unemployment report remains a pivotal factor that could either solidify or challenge the current bullish narrative.