AUD/CAD Formed Bullish Pin Bar around Key Support Zone
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Canada – Raw Materials Price Index
Tomorrow, at GMT 12:30 p.m., the Statistics Canada will release the month-over-month Raw Materials Price Index (RMPI), which measures the changes in the price of raw materials bought by manufacturers in the country over the past month.
Binary options investors consider the RMPI to be an important leading indicator of consumer inflation in Canada, because if manufacturers pay more to buy raw materials, then ultimately the retail customers end up paying for the higher cost of production.
Over the past several months, the Canadian RMPI has been gradually increasing. But, in August, it fell by 5.9% and if the current trend continues, it would add additional bearishness to the Canadian Dollar.
Australia – Building Approvals
Later on Wednesday, at GMT 1:30 a.m., the Australian Bureau of Statistics will release the national month-over-month building approvals figure, which measures the changes in the number of approvals of new buildings.
Since a build permit indicates new construction work, it suggests that there would be additional positive economic activities. For example, new jobs would be created for construction workers. Therefore, binary options traders consider this data regarding new building approvals to be a leading indicator of the overall economic health of the country.
Last month, the building approvals figure went up by 4.2% and this month the forecast was set at a modest 1.9% decline.
Trade Recommendation for the AUD/CAD
After breaking above the long-term downtrend line in early August, the AUD/CAD appeared bullish. However, over the last two months, the AUD/CAD had been mostly bearish and fell around 590 pips.
Last week, the AUD/CAD found support around the long-term downtrend line, and formed a bullish pin bar. Although the price penetrated above the high of the pin bar, the lack of bullish momentum in the market failed to push the price much higher and soon it retraced below the resistance around 0.9345.
As the Canadian raw material price index fell for last two months, the overall fundamental outlook for the AUD/CAD would be bullish this week.
Under the circumstances, it is recommended that traders consider placing a CALL order for the AUD/CAD with their binary options brokers, once the price closes above the high of September 24, which is at 0.9374.
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Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes on various tech and financial topics. You can reach him at contact@asifimtiaz.com
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