AUDCAD seems to be done with its downtrend as a reversal pattern can be seen on its 4-hour forex chart.

The pair failed in its recent attempts to break below the 0.9500 major psychological support and could test the neckline of the double bottom formation around the .9700 major psychological resistance.

Stochastic is still pointing down for now though, which means that Aussie bears are in control of price action. If this carries on, AUDCAD might have a shot at breaking below the .9500 support zone and resuming its downtrend. After all, the short-term moving average is treading below the longer-term moving average, confirming that the downtrend is still valid.

On the other hand, a move towards .9700 and an upside break past the neckline at .9700 could mean more gains for the pair. To be specific, at least 200 pips in gains could be logged in, as the chart pattern is roughly of the same height.

Event risks for this reversal trade today include the Canadian CPI and retail sales releases. Inflation probably slowed down for Canada in March, with the headline reading slated to post a 0.5% gain and the core figure to show a 0.3% uptick. Meanwhile, headline retail sales could show a 0.5% rebound while core retail sales could print a 0.7% increase, which might be enough to keep the Loonie supported.

Of course weaker than expected data could lead to a strong bounce for this pair, especially since Australia just released stronger than expected jobs figures yesterday. There are no top-tier reports lined up from the Australian economy today.

Bear in mind that the BOC also specified that they are not looking to cut interest rates anytime soon, as Governor Poloz has been seeing a lot of improvements in the Canadian economy these days.

By Kate Curtis from Trader’s Way