The Australian Dollar has been trading in an ascending channel against the Loonie since mid-November. The upper boundary of this pattern and a long-term channel down near 0.9875 was reached five weeks later.
Since then, the Aussie’s failure to move below the 0.9782 mark has resulted in the formation of a descending triangle. The pair had reached its upper boundary, likewise reinforced by the 200-hour SMA, on Tuesday morning.
From theoretical point of view, this triangle should be breached to the upside. A breakout in this session is also signaled by technical indicators. The subsequent surge is not expected to be long-lasting, as the upper boundary of the senior channel is located nearby circa 0.9850.
Taking all this into account, the base scenario favours a test of the senior channel and a reversal near this area.
Since then, the Aussie’s failure to move below the 0.9782 mark has resulted in the formation of a descending triangle. The pair had reached its upper boundary, likewise reinforced by the 200-hour SMA, on Tuesday morning.
From theoretical point of view, this triangle should be breached to the upside. A breakout in this session is also signaled by technical indicators. The subsequent surge is not expected to be long-lasting, as the upper boundary of the senior channel is located nearby circa 0.9850.
Taking all this into account, the base scenario favours a test of the senior channel and a reversal near this area.