AUDCAD started 2026 by breaking above the upper boundary of a flat channel between 0.907 and 0.922, a range that had confined the pair for four months. This upward momentum eased market volatility, leading to a formation of a flag pattern on the daily chart. Prices are expected to move in the same direction, with the current lull offering traders a favorable opportunity to accumulate long positions. An update of the 2024 highs could be the next bulls’ target, but the pair should achieve 0.938 first.
Interestingly, this is not the first time over the past six months that AUDCAD has moved within a certain range before breaking out of it. After surging in September, a pullback followed, but the previously broken resistance at 0.902 was never retested. In the current context, a smart move would be to place a Stop loss order at the upper boundary of the breached channel (0.922). Dips that do not exceed this level are worth buying.
The Relative Strength Index (RSI) has recently exited overbought territory, though it remains dangerously close to it. An emerging flag pattern and stabilizing prices may help technical indicators return to neutral levels, setting the stage for the next wave of growth. Meanwhile, the Stochastic Oscillator is poised to generate a buy signal, meaning the current lull is unlikely to last long, especially with a train of key economic events scheduled for next week.
Canada’s inflation statistics are due on Monday. Australia’s labor market report will follow on Thursday. If the actual figures align with the forecasts, the Aussie has a solid chance of extending its gains against the Canadian dollar further. The loonie, in turn, failed to rise substantially amid higher oil prices, so it doesn’t look like an asset with great potential. At the same time, Australia’s inflation expectations remain elevated, increasing the probability that the central bank will raise interest rates this spring.
Consider the trading plan suggested down below:
Buy AUDCAD between 0.926 and 0.93. Place Take profit at 0.938 and Stop loss at 0.922.
This content is for informational purposes only and is not intended to be investing advice.
