AUD/CAD Analysis: Gap Pushes Price Beyond the Broadening Triangle
FXOpen
On 19 August, Reserve Bank of Australia Deputy Governor Andrew Hauser adopted a more hawkish tone, warning that another rate increase could become necessary if the inflation risks highlighted by the central bank — including the conflict in the Middle East, a surge in demand from the AI sector and weak productivity — begin to materialise.
His comments came one week after the RBA decided on 11 August to leave its policy rate unchanged at 4.35% for a second consecutive meeting.
For the Canadian dollar, oil prices remain a more important driver. Crude has continued to rise this week amid heightened geopolitical tensions and concerns over potential supply disruptions. Higher oil prices can traditionally support the Canadian dollar given the country's significant commodity exports.
Technical Analysis of AUD/CAD
On the four-hour AUD/CAD chart, a medium-term sideways range has been developing since April. Within this range, the price has formed a broadening triangle, characterised by trendlines that diverge rather than converge and reflecting progressively wider price swings.
On Monday, 24 August, trading opened with a gap above the upper boundary of the formation. If the bullish impulse continues to develop, the next significant obstacle could be the red resistance level at 0.9925.
A failed breakout and subsequent reversal lower would bring several key levels within the current market profile into focus. These include the upper profile boundary at 0.9850, the Point of Control (POC) at 0.9832 and the lower profile boundary at 0.9815.
Below the profile's main area of concentration, near the base of the triangle, lies the green support zone around 0.9785.
The RSI + MAs indicator currently shows readings of 71, 48 and 50. The oscillator is approaching overbought territory, while both moving averages remain around the middle of the neutral zone, providing little confirmation of the strength of the current move.
Key Takeaways
The elevated RSI reading and neutral moving averages are yet to produce a coordinated signal, leaving the sustainability of the gap and the attempted breakout uncertain.
The fundamental backdrop is also sending mixed signals. The RBA's increasingly hawkish rhetoric provides support for the Australian dollar, while higher oil prices could strengthen the Canadian dollar. The balance between these two forces may prove decisive for the next move in AUD/CAD.
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