AUD/CAD Bearish Setup: Targeting 0.905 in Coming Days
Muhammad Faraz 
AUDCAD Bearish Setup Targeting 0.905 in Coming Days
AUD/CAD price action has recently tested a strong resistance zone near 0.911, 0.915 and failed to sustain above it. The rejection from this zone suggests renewed bearish momentum, pointing to a likely pullback toward the 0.905 area in the coming days.
Our bearish bias is supported by multiple technical factors including resistance confluence, volume decline on upward moves, and lower-high structure formation.
Current Market Structure and Price Action
The pair has been trading in a descending channel since early October, with sellers defending every retest of the upper boundary. The latest move toward 0.911 encountered heavy resistance, aligning with prior swing highs and a dense sell zone marked in red on the chart.
A clear rejection pattern followed, characterized by lower highs and sustained bearish candles, confirming that sellers remain in control. The short-term structure has now turned bearish below 0.912, favoring continuation toward the next demand zone near 0.905.
Identification of the Key Resistance Zone
The Strong Resistance Zone between 0.911 and 0.915 remains the most critical technical area on the chart.
- Historical Significance: This zone has repeatedly capped price rallies over the last two weeks.
- Technical Confluence: It aligns with the 38.2% Fibonacci retracement level and sits just below the 200-period EMA on the H4 timeframe.
- Market Psychology: Traders view this level as a profit-taking zone, where sellers often step in to defend the trend.
Together, these elements form a high-probability reversal zone, validating our bearish outlook.
Technical Target and Rationale
Primary Target (PT1): 0.905
This level coincides with prior swing lows and acts as a major short-term support zone. A retest of this level would represent a healthy correction in line with the broader downtrend.
Secondary Target (PT2): 0.900
Should momentum persist below 0.905, the next potential support lies near 0.900, a psychological round number and previous structural base.
Prediction: Price is expected to drift lower from the resistance area toward 0.905, with potential continuation to 0.900 if bearish pressure intensifies.
Risk Management Considerations
- Invalidation Level: A sustained close above 0.915 would invalidate this bearish setup, signaling a possible trend reversal.
- Stop-Loss Suggestion: Traders could consider placing stops slightly above 0.915 to safeguard against false breakouts.
- Position Sizing: Keep risk exposure within 1–2% of trading capital per position to maintain controlled drawdowns.
Proper risk management ensures longevity even when market reactions differ from expectations.
Fundamental Backdrop
While this analysis is primarily technical, a few macroeconomic factors reinforce the current outlook:
- Interest Rate Divergence: The Reserve Bank of Australia’s dovish tone contrasts with the Bank of Canada’s cautious stance, favoring short-term CAD strength.
- Commodity Sensitivity: Weakness in iron ore prices, a key Australian export, continues to weigh on the AUD.
- Global Risk Sentiment: Risk-off conditions support defensive currencies like CAD, enhancing bearish pressure on AUD/CAD.
These fundamentals align with the ongoing technical setup, strengthening the bearish projection toward 0.905.
Conclusion
AUD/CAD is currently respecting a strong resistance structure near 0.911, and technical signals favor a short-term bearish continuation. Unless the pair decisively breaks above 0.915, the probability of a move toward 0.905 remains high.
Traders should monitor price behavior around 0.905, a decisive break below this zone could open the path toward 0.900.
Chart Source: TradingView
Disclaimer: This analysis represents personal opinion and educational commentary, not financial advice. Trading carries significant risk. Conduct your own due diligence before taking positions.
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