By: Mike Kulej
With the recent events in the Middle East and the North Africa, came renewed attention to the commodity currencies. Unlike many similar periods before, though, they do not act in unison this time. Money seems to flow and ebb from one of them to another, creating uncertain trading conditions.
The relationship between the Australian Dollar and the Canadian Dollar paints a particularly indecisive picture. This pair is stuck at historically elevated level, oscillating around the parity level. Market participants seem to find this valuation as “fair”, since the price is moving in ever contracting range.
The Future of AUD-CAD
That will not last forever, and the AUD-CAD will eventually find a direction, sooner rather than later. On the intermediate term chart, the highs and lows form a large symmetrical triangle. It is in an advanced stage and should not contain the price for much longer. We could see a breakout perhaps as early as this week.
The true test of direction, however, will come when the AUD-CAD approaches the next resistance of 1.0125, in case of an upside breakout, or the 0.9825 support, if the price moves down. Once either of them gives way, the next longer term trend should be in that direction.