The Australian dollar versus the Canadian dollar currency pair bounced off after the strong depreciation from 0.9093. It’s the bears preparing a new leg to the downside or the bulls already took control?
After exiting from the descending channel that ended with a diamond pattern, the price appreciated until it touched the 0.9093 level, peaking at 0.9119.
From the peak, the price dropped under the important local level of 0.9100, printing a low at 0.8966, only to crystalize a strong bullish candle on November 19.
The appreciation on November 19 is a signal of bullish enthusiasm, but that is not enough for the price to keep driving towards higher values.
However, a positive fact for the bulls is that by rising above 0.9010 they managed to conquer a level that served as a resistance for most of the length of the diamond pattern.
Usually, for an appreciation to commence, the price must retrace towards the level it pierced to confirm it as support. But as the appreciation is such a strong one, the lesser the retracement, the greater the chances of it to continue.
As a consequence, the bulls can adopt an aggressive or conservative approach. The aggressive one is already on the way, as the bulls joined the market around the 0.9045 mark.
The conservative one awaits for the piercing of 0.9093, with a candle closing above it.
The targets are represented by the 0.9300 and 0.9200 psychological levels, respectively.
After the consolidation limited by the resistance of 0.9105 and the support of 0.9041 gave way, the price dropped to the next important support, 0.8985.
From 0.8985 the price rallied and managed to reconquer 0.9041.
As long as 0.9041 holds, the profile remains bullish, with a target at 0.9105, which if it gets taken out, the price has an easy path towards the next target, 0.9204.
Only if 0.8985 is confirmed as resistance, then the profile will turn into a bearish one, targeting 0.8923.
Levels to keep an eye on:
D1: 0.9100 0.9093 0.9300
H4: 0.9041 0.9105 0.9204 0.8985 0.8923
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