The AUD/CAD pair fell during the session on Thursday, testing the bottom of the hammer that had formed on Wednesday. However, as you can see I have the 0.9750 level marked as support in this pair, and therefore think this is an excellent place to start buying. The Australian dollar is against support against the US dollar as well, so as these pairs tend to move in tandem, it makes perfect sense that we could perhaps see a move higher in this market. Will it be the be-all end-all of massive moves higher? Probably not. However, I do think that a short-term buying opportunity up to the 0.9850 level is available now, and fully intend on taking advantage of it.
If the gold markets can give us enough of a boost, the Australian dollar should continue to appreciate over the longer term, and on top of that, the Canadian dollar is highly sensitive to the oil prices which look very suspicious at the moment to say the least. The oil markets have been very soft, and as a result I am very bearish of the Canadian dollar long-term.
Gold versus oil
A lot of traders will use this is a simple proxy for gold against oil instead of trading in the futures market. After all, the Australian dollar is highly sensitive to the price of gold while the Canadian dollar of course is sensitive to the price of oil. Because of this, barring any economic shocks coming out of either one of these countries, this is essentially a commodity versus commodity type of situation. It always is a good market to look and see which one of the commodities you should be involved and if you play the futures market, as it is more of a pure play on strength than anything else.
I do see the 0.95 level as being the "floor in this market, so even if we broke down a little bit from here, I would be that interested in shorting and would simply be waiting for supportive candle closer to that area in order to start buying again. Ultimately, it would not surprise me to see this market eventually go back to parity, but expect a bumpy ride on the way back up
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