AUDCAD is hovering just below the 0.8927-0.8981 range, and it is ready to test the support set by the January 26, 2023 downward sloping trendline. It has recorded five consecutive red candles; the strongest sell-off since the October 2022 downleg when the pair dropped to the lower level since April 2020.

The bears must be feeling confident at this juncture as the momentum indicators are pointing to a potential continuation of the current correction. More specifically, the Average Directional Movement Index (ADX) is gradually edging lower, cancelling out the bullish trend that led AUDCAD to the local peak of 0.9116 on June 16. More importantly, the stochastic oscillator is sending a stronger bearish signal as the main indicator has dropped below its overbought area and it is moving lower in a vertical fashion.

Should the bears remain in control of the market, they would quickly try to clear the lower boundary of the 0.8927-0.8981 range and the January 26, 2023 downward sloping trendline respectively. Lower, the June 6, 2002 high at 0.8843 will probably prove easier to break compared to the more important October 20, 2022 upward sloping trendline.

On the other hand, the bulls are keen on putting a stop to the current correction. Clearing the 0.8927-0.8981 range appears to be their initial target before testing the resistance set by the 0.9042-0.9064 area, which is defined by 100- & 200-day simple moving averages (SMAs). Even higher, the 0.9131-0.9170 range awaits the bulls.

To sum up, the current AUDCAD correction appears to have legs especially if the bears manage to clear the 0.8843 area.