A reversal chart pattern can be seen on the 4-hour time frame of AUD/CAD, indicating that the pair’s climb may be cut short and may soon reverse. The heand and shoulders formation has a neckline around the 1.0150 minor psychological support, which the pair is testing at the moment.

Stochastic is moving up from the oversold area, indicating a potential bounce. However, a strong break below the neckline could mean a 200-pip selloff, which is the same height as the chart pattern.

Shorting below the 1.0150 handle and aiming for roughly 150 pips, which would be until parity, could yield a 3:1 return on risk with a 50-pip stop.

By Kate Curtis from Trader’s Way