A short-term selloff might be in the cards for AUDCAD, as the pair created a double top pattern on its 1-hour time frame. Price has found resistance at the .9950 mark and is finding support at the neckline around .9850.
A break below this support zone could confirm the potential downtrend, which might last until the .9700 levels or the previous lows. Take note though that stochastic is moving out of the oversold area, reflecting a return in buying momentum, which could take price back to the recent tops.
A rally could lead to another test of the .9950 resistance and the formation of a triple top, which would still be a valid reversal pattern. Shorting at the top of the range could offer a higher return-on-risk, with a tight stop above 1.0000. On the other hand, a break below .9850 could offer the chance to short around .9800 and aim for .9700, for a smaller reward ratio.
By Kate Curtis from Trader’s Way