Trade setups for today: EUR/CAD retest of horizontal resistance rejected. Meanwhile, AUD/USD awaiting the RBA decision.
Trade Setup 1: EUR/CAD Trend Following
EURCAD printed double bearish candles at the main horizontal resistance for the overall downtrend. Firstly a spinning top candle, followed by a smaller shooting star candle.
Today, the price confirmed the rejection and broke back below the low of the spinning top candle at 1.4642, and closed the daily candle below it. Meanwhile, the RSI has reached its prior resistance area, just below overbought region.
We already know from my technical analysis tutorial that RSI can form patterns, and also in trending markets, it usually fails to reach overbought areas.
Having that said, I am speculating on a down move towards my first target at 1.4550. And a second target near the main support zone around 1.4450.
Trade Setup 2: AUDUSD Awaiting Final Confirmation
The AUDUSD was also rejected at the falling trend line for the overall bearish trend. Meanwhile, the price formed a shooting star candle at the 61.8 Fibonacci retracement for the latest major bearish wave(0.7082-0.6670). The 200-days simple moving average is also just above the main falling trend line.
For confirmation, I looked into the shorter interval four-hour chart for clues of a reversal. Indeed, the price reversed from the 1.618 Fibonacci extension level for the latest bearish wave as shown in the below chart. While being rejected, it formed a double top reversal pattern, with a neckline at 0.6883. Therefore, I will speculate on a downside move ONLY if the neckline at 0.6883 is broken and a four-hour candle closes below it. If there is no breakout there is no trade.
The Reserve Bank of Australia monetary policy decision is due within a few hours. Probably it will either confirm or negate the trade.
My first target would be in the 0.6810-0.6815 area. And the second target at 0.6725.
Update: The AUDUSD failed to confirm the setup and therefore the trade was discarded.
Trade with care