AUDCAD

AUD/CAD dropped over a full percentage point last week, aided by the Australian Dollar’s reactive risk-off weakness. The currency pair fell to a new multi-year low, its lowest point since April 24, 2020. Despite the fresh lows, there are signs that a reversal could be near. Last week’s new low corresponded with a higher low in the Relative Strength Index (RSI).

That divergence between price and the RSI oscillator is a bullish signal. That said, if a reversal does occur, the falling 50- and 200-day SMAs would serve as potential resistance. Piercing above those levels would put the lower highs seen in the preceding downtrend into focus. Alternatively, a move lower has the potential to invalidate the positive divergence seen and push the RSI reading back into oversold territory.

Now we've reached a major resistance level let's see how price responds here.