The Australian dollar versus the Canadian dollar currency pair dropped to and then recovered sharply from the 0.8900 psychological level. The question is now: is this a sign of the bulls taking control?
Long-term perspective
After the impulsive wave that started from the confluence area of the upper line of the descending channel with the 0.9222 level, the price began a consolidative phase from the 0.8900 psychological level.
Of course, the traders were eyeing the end of this phase, a new impulsive wave, respectively. But an impulsive wave can debut — considering the descending trend — only from a resistance. The resistance that the market decided that fits was 0.9023, a level which favored an interesting decline that was in turn stopped by the 0.8900 level.
Given this, it is correct for any trader to assume that the market still in in a consolidative phase and that the decline served only the purpose of finding the support. Consequently, the consolidative phase is limited by the resistance of 0.9023 and the support of 0.8900.
One scenario that plays along the current state of matters is for the price to ascend towards the double resistance area consolidated by the 0.9104 level and the upper line of the descending channel, and to begin a new descend from there. But, for this scenario to play out, even a false piercing of 0.9023 is sufficient. Of course, for the time being, a relevant target would still be 0.8900.
Another possibility is for the price to breach the aforementioned double resistance (0.9104 level), thus signaling the end of the decline that started at 0.9114. In this case, an objective target would be represented by 0.9222.
Short-term perspective
The price retraced to a double resistance etched by the resistance line and the 0.9000 psychological level. Even if this area would favor a fall towards the 11.4 Fibonacci retracement level, after such a retracement the odds are for the upwards move to continue, targeting the 50.0 retracement level.
If the 50.0 retracement level allows the continuation of the rally, then the second target is represented by 61.8 with the 0.9118 resistance.
Levels to keep an eye on:
D1: 0.8900 0.9023 0.9104 0.9222
H4: 0.9000 0.9118 and the Fibonacci retracement levels — mainly 11.4 50. 61.8
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