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Following the soft Australian inflation report, AUD/CAD broke below a near-term rising support line from May. This opens the door for resumption of the dominant downtrend from mid-March to mid-May. With that in mind, this presents an attractive opportunity for a short position. The stop for this setup will be a daily close above the most recent high around 0.96618.
Meanwhile, prices may eventually reach the May low around 0.95533 which would be the target of this short setup. Calculating a risk-reward ratio of at least 2-to-1 reveals an entry point around 0.96256 which was used to short AUD/CAD. Along the way there may be a couple of points where prices could stall. This is the November and December 2017 lows at 0.96122 and 0.95786 respectively.
Meanwhile, prices may eventually reach the May low around 0.95533 which would be the target of this short setup. Calculating a risk-reward ratio of at least 2-to-1 reveals an entry point around 0.96256 which was used to short AUD/CAD. Along the way there may be a couple of points where prices could stall. This is the November and December 2017 lows at 0.96122 and 0.95786 respectively.