AUDCAD - Short potential
After a month of trading within it’s 0.9220-0.9100 range it looks like we could be gearing up for a run at the range low and a possible breakout to the downside. These types of positions are our bread and butter and are often good earners. In the case of this pair, we do have an area of relative support waiting for us at 0.9050 so we have two options available to us here. Option number one is that we take an entry upon a close below 0.9100, ideally, we would wait for a breakout and retest of the level before entering but given that in this situation we will be looking to take our profit off the table at 0.9050 that may not be necessary as a bounce from 0.9050 would almost certainly end up back at entry we may as well take the profit off the table and enter again once the retest is confirmed this time extending our target down to 0.8850. Option number two is to wait for the above to play out and then use a breakout strategy to enter below 0.9050, in this case we will need a decent sized stoploss but with a target at 0.8850 we can afford to do this and still bank a decent risk to reward ratio at the same time. If price breaches 0.9200 then it may be best suited to abandoning the short bias for the time being and turning attentions to long positions above 0.9250 targeting 0.9420 but this will be covered if it becomes the more likely scenario.
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