AUD/CAD short-term cup and handle points to 0.9700
On a weekly timeframe, AUD/CAD made a low in March 2020 near 0.8070. The pair then began moving higher. Nearly one year later, AUD/CAD put in a high of 1.0000 during the week of February 22nd, 2021. AUD/CAD then pulled back to the 50% retracement from the March 2020 lows to the February 2021 highs, however the pair failed to close below it, near 0.9032. Since then, AUD/CAD closed higher in 8 of the last 9 weeks and broke above a downward sloping trendline near 0.9186.
Source: Tradingview, Stone X
On the daily timeframe, in addition to breaking above the downward sloping trendline dating to the February 21st, 2021 highs, AUD/CAD retraced to the 50% level from those same highs to the lows of January 28th, near 0.9458. It then pulled back to retest the top of the trendline and held it. The pair is on its way back up to test the 50% retracement level once again.
Source: Tradingview, Stone X
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On a 240-minute timeframe, price action has formed a cup-and-handle pattern. The target for the cup-and-handle formation is the height of the cup, added to the breakout point of the handle. In this case, the target is near 0.9700. However, if price is to get there, it must first pass through a confluence of resistance at the 50% retracement level and horizontal resistance near 0.9460. Above there, resistance is at the 61.8% Fibonacci retracement level from the previous mentioned timeframe. However, if this proves to be a false breakout above the handle, first support is at the top trendline of the handle near 0.9390, then the bottom trendline of the channel near 0.9340. Below there, price can quickly fall to the lows of March 16th (bottom of the cup) near 0.9172.
Source: Tradingview, Stone X
The charts show the AUD/CAD is running into a key resistance level at the 50% retracement from the February 2021 highs to the January 28th lows. However, the shorter-term charts show that price has formed a cup-and-handle formation. The pair has recently broken above the handle. If it can get though the near-term resistance, then AUD/CAD will then target near 0.9700.
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