Is the Aussie ready to extend its losses against the Loonie?

Or will buyers step in around these major inflection points?

Check out these key levels we’re watching on the 4-hour time frame:

AUD/CAD 4-hour Forex Chart by TradingView

AUD/CAD seems to be picking up bearish momentum as it breaks below a tight consolidation range between 0.8960 and 0.9000, following through on its strong downtrend since October 2024.

The Aussie-Loonie pair has been consistently forming lower highs and lower lows within a descending channel, with the latest break suggesting that sellers might be gearing up for another push lower.

Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the euro and the Canadian dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!

Looking at the technicals, the 100 SMA is below the 200 SMA, confirming that bears have the upper hand for now. These moving averages are also converging with the falling “highs” pattern and R1 pivot resistance ($0.90523), creating a very strong area of interest for both the bulls and bears to keep tabs on.

But for now, the market  is currently starting to break below the recent consolidation zone. A sustained move lower could encourage more technical sellers to join in, potentially taking AUD/CAD down to the next potential strong area of interest.

That next potential major barrier sits at the confluence of the S2 pivot level ($0.88793), the 0.8900 major psychological handle, and the falling “lows” area. This might be where buyers could step in to book profits or attempt a reversal, given the history of the falling “lows” acting well as support and given the distance from here to there being right around the daily ATR of around 56 pips.

However, if bulls manage to defend current levels and push the pair back above the consolidation area between 0.8960 and 0.9000, then a move to the previously discussed strong confluence between the moving averages, the falling “highs” pattern and R1 pivot resistance could be in the cards. But given this would be counter trend, the risks are a bit greater. So having a stronger sense on upcoming fundamental drivers would be prudent before going counter trend.

It is this area, though, where the strongest technical setup lies. Because of the strong downtrend, if bearish reversal patterns form around the top confluence of technical arguments, that may draw in both short and longer-term technical sellers, assuming that there are no major changes the fundamental landscape.

There’s quite a few potential setups here, and whichever direction you choose to trade, just make sure you practice proper risk management and stay updated on economic releases that could impact both the Australian and Canadian dollars!