11 Sep Weekend Analysis For W/C 12th Sept 2011 AUD CAD 2B Top Possibility.
I’m not convinced by AUD:CAD’s recent rally and although I have mixed feelings for both currencies in the short term, the price action seen over the last couple of weeks may warrant AUD CAD being on the watch list.
Current price action is similar to a number of topping patterns I’ve seen over the last 6 Months, specifically since I was introduced to the 2B top variation of a double top by Wernluck (See favourite links to the side of the blog page).
Here is an excerpt explaining the 2B top scenario, click to enlarge:
Technically, AUD:CAD does not fit the 2B top rule perfectly because the recent high didn’t actually break the previous high, but in favour of the topping potential, we do have MACD divergence on most time frames (Monthly has been diverging for years) and a bearish evening star candlestick pattern that just requires confirmation.
The daily chart currently looks like this and appears ready to roll. If price doesn’t confirm this top, I may consider a more aggressive approach with a short from around 1.0500 and stop losses set at approx 1.0555 and will update the blog if and when that position is taken.