AUD/CAD traded higher on Wednesday, breaking above the 0.9360 barrier, and at the time of writing, it is testing the 0.9400 area, marked by the high of May 20th. Since yesterday, the rate has been trading above the downside resistance line drawn from the high of April 21st, and thus, we believe that the short-term outlook may have started turning to somewhat positive.
A break above 0.9400 may add more credence to that view, perhaps paving the way towards the peak of May 14th, at 0.9432, or the 0.9450 zone, marked by the inside swing low of May 7th. If neither barrier is able to stop the bulls, then a break higher could see scope for extensions towards the 0.9500 area, marked by the high of May 11th, where another break may set the stage for the peak of the day before, at around 0.9555.
Shifting attention to our short-term oscillators, we see that the RSI lies above 50 and points up, while the MACD, already above its trigger line, has just poked its nose above its zero line. Both indicators detect upside speed and increase the chances for the rate to continue drifting north, at least for a while more.
In order to start examining the resumption of the prior downtrend, we would like to see a dip below 0.9308. Such a move would confirm a forthcoming lower low on both the 4-hour and daily charts and may open the path towards the low of October 20th, at 0.9247. Another break, below 0.9247, could extend the slide towards the low of June 2nd, at 0.9190.
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