Developing Story
AUD/CAD is in a supply zone on the monthly charts and there is a compelling case for further distribution which gives rise to a short side playbook and near-term swing trading set-up.
The following is a top-down analysis from a monthly, weekly, daily and 4-hour entry perspective.
Monthly chart
As can be seen in the following chart, the price has had rallied for five consecutive months and bulls are cashing-in.
This gives rise to further downside prospects.
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Weekly chart
-637353087335878710.png)
In the weekly chart, there are a series of breaks in the rally which make for interesting downside targets as they have a confluence with the Fibonaccis.
Daily chart
-637353088111914690.png)
For the meantime, however, there are closer structural supports that need to be achieved first which makes for a Wave 3 set-up to the downside.
4HR chart
-637353096326465581.png)
The 4-hour chart offers a rising channel formation, or it could have been drawn as a bearish wedge formation - it does not matter.
The point here is that the correction is steep enough and structurally, the price is stalling at a 61.8% Fib retracement and resistance, ripening for the downside extension of the prior bearish impulse and trend.
Price action will be monitored on a 4-hour basis for bearish conditions which meet the criteria for a short entry.
There is, however, still the possibility that the price continues higher to pick up more liquidity at resistance.
The current position is offering in the region of a 1:5 risk to reward.
Update: We price now start its bearish path?
The price, as expected, has moved into the supply zone to pick up more liquidity at which point, a sell-off would be expected.
The price will be monitored from a 4-hour time frame for the start of a bearish trend.
-637353424932336451.png)
4HR update
-637353703260988304.png)
As can be seen, the price is behaving as expected and the charts are being monitored on a 4-hour basis for bearish conditions and setup.
End of week update
-637354585385668692.png)
More to come next week...
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