The AUDCAD is trying to find direction after a sell-off dropped this currency pair from its resistance area, visible in light grey in the above H4 chart, to its support area which is visible in light blue. The sell-off was delivered in weakness in the Australian currency and not strength in the Canadian one. Profit taking has further provided momentum to the sell-off, but the AUDCAD is now trading at a solid support level and an ascending support level is increasing bullish pressures.
A short-covering rally should be expected as forex traders are likely to realize floating trading profits after a decent sell-off by closing their short positions. The upper Bollinger Band is trading just above its support area while the lower Bollinger Band is trading just below it with the middle Bollinger Band inside of its support area. The AUDCAD already broke out above its middle Bollinger Band which resulted in a bullish trading signal.
Forex traders are advised to seek long entries at 0.9485 or below this level as the AUDCAD is expected to breakout above its upper Bollinger Band. Conservative forex traders should wait for a confirmed breakout above the middle band before entering their long positions. A take profit target of 0.9655 has been set for a potential trading profit of 170 pips on the H4 Chart. More buy orders are expected after the AUDCAD completes its breakout above the upper Bollinger Band.
Forex traders should protect this trade with a stop loss level at 0.9400 for a potential trading loss of 85 pips which will result in a Risk-Reward (RR) ratio of 2.00.
Long @ 0.9485
TP @ 0.9655
SL @ 0.9400