AUD/CAD Advances Post Flag Breakout
15 May 2024
The Australian dollar to Canadian dollar (AUD/CAD) pair has showcased a compelling technical setup that epitomizes the essence of clean, actionable price action trading. Since April 19th, this currency pair has been charting a clear uptrend, as detailed on an hourly chart, where we recently witnessed a significant breakout. The pair initially breached the key resistance at 0.9—marked with a yellow line—and this level has since transitioned to serve as robust support, especially noted in yesterday's trading session.
Following the breakout, AUD/CAD entered a flag formation, marked by two parallel green lines, which is typically a continuation pattern in technical analysis. Yesterday’s session proved pivotal as the pair bounced off both the lower boundary of the flag and the key horizontal support, advancing higher. Today, the price action has seen the currency pair breaking through the upper line of the flag, signaling a bullish continuation. This move aligns with the classic interpretation of a flag breakout in an uptrend, which suggests a buy signal for traders watching this development.
Given these dynamics, the current trajectory of the AUD/CAD indicates sustained bullish sentiment, contingent on the price holding above the 0.9 support level. Conversely, a drop below this threshold would signal a shift to bearish momentum, warranting a short position. Traders and investors should maintain vigilance around these levels, as the AUD/CAD pair offers a textbook example of price action trading at its most clear and predictable.