AUD/CAD Daily Price Forecast – 12th May 2025

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Trade Summary:

AUDCAD
Buy Stop @ 0.89668
TP @ 0.89950
SL @ 0.89262

AUD/CAD Technical Analysis

Chart Overview

The chart provided is a 4-hour (H4) timeframe for the AUD/CAD currency pair. Key levels and indicators are marked, including:

• Buy Stop: 0.89668

• Take Profit (TP): 0.89950

• Stop Loss (SL): 0.89262

• Moving Averages:

  • Yellow line: Likely a short-term moving average (e.g., 20-period MA).

  • Red line: Likely a longer-term moving average (e.g., 50-period or 200-period MA).

Key Observations

• Trend Analysis:

  • The price is trading above the red moving average, indicating a bullish trend in the medium to long term.

  • The yellow moving average is also sloping upward, suggesting short-term bullish momentum.

• Price Action:

  • The price is consolidating near the Buy Stop level of 0.89668, indicating a potential breakout.

  • The recent candles show bullish momentum with higher highs and higher lows.

• Support and Resistance:

  • Support: The Stop Loss level at 0.89262 acts as a key support zone.

  • Resistance: The Take Profit level at 0.89950 is a significant resistance zone.

• Breakout Setup:

  • A Buy Stop order at 0.89668 suggests anticipation of a breakout above this level.

  • The Take Profit level at 0.89950 is strategically placed near a resistance zone, aiming to capture the upward momentum.

Trading Plan

• Entry:

  • Enter a long position if the price breaks above 0.89668 (Buy Stop level).

• Stop Loss:

  • Place the Stop Loss at 0.89262 to limit downside risk. This level is below recent support, providing a buffer against false breakouts.

• Take Profit:

  • Target the 0.89950 level for profit-taking. This level aligns with a resistance zone and offers a favorable risk-to-reward ratio.

Risk-to-Reward Ratio

• Risk: Difference between Buy Stop and Stop Loss = 0.89668 - 0.89262 = 0.00406 (40.6 pips).

• Reward: Difference between Take Profit and Buy Stop = 0.89950 - 0.89668 = 0.00282 (28.2 pips).

• Risk-to-Reward Ratio: Approximately 1:0.7. This is slightly below the ideal 1:2 ratio, so traders should consider adjusting the Take Profit or Stop Loss levels to improve the ratio.

Market Sentiment

• The bullish setup suggests optimism for the Australian Dollar (AUD) against the Canadian Dollar (CAD). However, external factors such as commodity prices (e.g., oil for CAD and iron ore for AUD) and central bank policies could influence the pair.

Conclusion

The AUD/CAD pair is showing bullish momentum, with a potential breakout above 0.89668. Traders should monitor the price action closely for confirmation of the breakout. While the setup is promising, the risk-to-reward ratio could be improved for better trade efficiency.

Recommended Lot Size

Trading is all about statistics.

While we can experience winning streaks, we can also suffer from losing streaks.

As such, we should always size each trade to withstand losing streaks (if any).

It's widely recommended that you should not risk more than 2% of your capital for each trade.

We believe it's easier to control your lot size by limiting your lot sizing to 0.01 for every $500 in your account.

So if you have $5000, then risk no more than 0.10 lot size per trade.

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If you spot a mistake especially when it comes to the price, please use common sense and check the chart.

We wish you good luck and good profit for this trade idea.

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