Head and Shoulders Pattern on AUD/CAD: Will Support Hold?
16 October 2024
In today's technical analysis, let's take a look at the Australian dollar to Canadian dollar, which is now forming a classic Head and Shoulders pattern. If you take a close look, you'll see the left shoulder, head, and the right shoulder, all neatly highlighted within the yellow rectangle. The right shoulder is nearing completion, and the price is currently bouncing off two key support levels.
The first support is the orange horizontal support, which previously acted as a resistance in August. This orange area is now playing a dual role: it's a support level and also serves as the neckline for the head and shoulders formation. The second key support is the green long-term uptrend line, which aligns with the orange area, creating a strong support zone.
A bounce off these two supports could be seen as a promising signal to buy, indicating that the support is holding strong. However, if the price breaks below these crucial supports, that would be a strong sell signal, pointing to further downside ahead. It will be interesting to see which direction the market chooses here.