AUD/CAD has been trading inside a range on its 1-hour time frame, finding support at the 1.0115 area and resistance at the 1.0215 level. Price has recently come off a test of the range support and appears ready to test resistance once more.

Stochastic is on middle ground, although it is on its way down and indicating a pickup in selling pressure. A move higher could signal a return of buyers, which might take the pair up to the top of the range before drawing in sellers. If the range resistance holds, another test of the range support might take place.

Shorting at 1.0215 with a tight stop and a target of 1.0118 could yield a high return on risk for a day trade. Trailing the stop could be a good way to minimize risk and lock in profits as price moves lower.

The event risks for this setup include the Australian retail sales and trade balance releases, as well as the Canadian trade balance release.

By Kate Curtis from Trader’s Way