Looking for Aussie trades now that China printed a downbeat inflation report?
Check out this neat reversal formation on AUD/CAD!
The pair is just closing in on its neckline support, so you might still be able to catch the double top breakdown.
AUD/CAD 1-hour Forex Chart by TV
Market players seem to be starting the week on a risk-off note since China just released weaker than expected CPI and PPI figures earlier today.
Instead of posting the estimated 0.2% year-over-year gain, headline CPI stayed flat in June. Producer prices also came up short and posted a steeper 5.4% drop compared to the earlier 4.6% slide.
Aussie bears were quick to react to the report, triggering a selloff across the board.
AUD/CAD seems to have room to slide, as the pair just seems to be gearing up for a break below its double top neckline, which happens to line up with S1 (.8830) and the 200 SMA dynamic support.
If so, price could fall by at least the same height as the chart pattern, which spans roughly 70 pips. This might be enough to take it down to S2 (.8760) or lower.
Meanwhile, the Loonie could enjoy some support leading up to the BOC decision, as the central bank is still widely expected to hike rates by another 0.25%.
Just be careful since technical indicators like the moving averages and Stochastic are hinting at a possible return in bullish pressure.
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