AUD/CAD 4H Chart 8/8/2012 9:30AM EDT

The 4H AUD/CAD chart shows a market that has found resistance at 1.06 and is now testing the 1.05 handle. In this downswing, the AUD/CAD is also cracking a rising trenline that goes back to June, and can been seen fully in the daily chart. The 4H chart shows that this 1.05 area was also a previous consolidation resistance. Also note the 4H RSI reading at 40.  The bullish price action and momentum is now being tested.

Taking just the latest bull swing in the 4H chart, a break below 1.05 opens up the 1.0480 (61.8% retracement level) in the near-term. Then if we get a pullback from around here, we should see if the market is able to make a lower high than the 1.0598 high, preferably staying under 1.0520 to show bearish development.

When looking at the daily chart, we see that the trendline has not been cleared. The bull trend seems intact except for an extended bearish divergence that suggests the bullish momentum losing fuel.

A return toward the 200-day simple moving average would target the 1.04 handle.

AUD/CAD Daily Chart 8/8/2012 9:32AM EDT

Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

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