AUD/CAD Price Analysis: Bears monitoring for 4HR 1:4.5 R/R setup

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.

Weekly chart

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

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

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.

4HR update

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

More to come next week...