AUD/CAD Trading Tutorial

The foundation currency is the Australian dollar (AUD). The Canadian dollar (CAD) serves as a counter-currency. 

The Australian dollar to Canadian dollar exchange rate (AUD/CAD) indicates the connection between the two currencies. 

This currency pair enables traders to profit from macroeconomic events occurring in specific international markets such as Australia and Canada without ever being fully exposed to the major currency pairs on the Forex market. 

It is crucial to highlight that the AUD/CAD chart is highly sensitive to broad commodity price patterns. 

These industries of both nations are heavily reliant on exporting natural resources.

Difference of AUD & CAD

The Australian dollar and the Canadian dollar are considered to be moderately stable currency pairs. Still, the AUD/CAD is heavily influenced by variations in commodity prices. 

As a result of its close relationships and historical ties with Asia and its hard commodities, Australia has established a long-term linkage between precious metals and the Australian dollar. 

Because of Canada’s position as the world’s leading commodities exporter, the value of the Canadian dollar is highly correlated to the price of crude oil.

The fortunes of the Canadian dollar are intricately linked to those of the United States, Canada’s closest and most outstanding trading partner, and its nearest neighbor. 

The Australian dollar is more closely tied to the state of the markets in the emerging Asian economies than the US currency.

Australian Dollar – AUD

It is the official currency of Australia, which includes the mainlands and territories. It also includes Kiribati, Nauru, Tuvalu, and Zimbabwe. 

Many people refer to the Australian dollar as “the Aussie.” The currency is denoted by the dollar sign ($). It is referred to as the Australian dollar or the A$ to distinguish it from the United States dollar.

The Australian dollar (AUD) is the fifth most extensively tradable world currency, accounting for 8.6 percent of daily foreign exchange transactions. The money is regulated by the Reserve Bank of Australia.

Canadian Dollar – CAD

The Canadian dollar, which is the country’s official currency, is denoted by the dollar sign ($) and is commonly referred to as CA$, C$, or CAD$ in other contexts. 

With a market capitalization of around US$119 billion, the Canadian dollar is the fifth most widely owned currency in the world. 

The Canadian dollar, also known as the “Loonie” because of the loon motif on its $1 coin, is controlled by the Central Bank of Canada and traded on the international financial markets under the currency code CAD.

Trivia: Both AUD/CAD is popularly known as Aussie Loonie.

How do you trade AUD/CAD?

As you may be aware, trading with contracts for difference (CFDs) is one of the most common methods of dealing with currencies such as the Australian dollar and the Canadian dollar. 

Traders from all over the world prefer to trade the AUD/CAD exchange utilizing contracts for difference (CFDs). In the foreign exchange market, contracts for difference (CFDs) are a type of derivative trading that has proven to be hugely common for working with currency pairs.

When trading using CFDs, traders are not required to hold physical possession of the currencies in question. A trader only needs to make a guess about which money in the pairing will climb and which will decrease for the transaction to be successful. 

It will take you no more than three minutes to somehow get started and gain access to the most actively traded marketplaces on the planet.

These are some detailed pieces of information you can note:

• Learn everything you can about how the pair functions.
• Examine many forex brokerages and select one.
• Open a forex trading account with a broker and establish a trading platform to use to trade forex.
• Analyze the AUD/CAD exchange rate and build a trading plan.
• Position yourself in your chosen field.
• Keep an eye on your profit or loss and then exit the deal.

Here are some lists of forex trading strategies you can try for AUDCAD:

1. Fast Line and Signal Line MACD Indicator

This forex indicator can be utilized in various ways to provide technical analysis information to traders.

• Crossing the MACD center line signifies bullish or bearish stocks; a reading below zero indicates a bearish market, while a reading above zero indicates a bullish market.
• Crossovers of the MACD suggest a buying and selling signal in the currency market.
• Using oscillations, you may identify oversold or overbought regions in a market.
• Price and indication divergence are searched for using this indicator.

The MACD forex indicator is created by combining two exponential moving averages. This forex guideline displays two lines on the chart. The 2 standards exponentially weighted moving averages that are employed are 12 and 26, respectively. When designing the MACD forex indicator, a normalizing factor of 9 is also used to ensure that the lines are smooth.

2. Buy and Sell Signals from MACD

It is possible to generate a buy forex trade when the MACD short line crosses over the signal line. This means that, as is the case with any leading indicator, these forex trading indicators are susceptible to whipsawing and fake outs. 

To avoid whipsaws, it is best to wait for proof of the buy or sell trading strategy before acting on them. When the two lines cross over the zero mark, a confirmation forex signal is formed. 

It is possible to generate a sell forex trading signal when the MACD fast line passes below the signal line on the chart. This is also susceptible to whipsaws/fake-outs, like the buying forex signal. 

It is preferable to wait for an official sell forex trading indication to avoid the whipsaw effect. 

The confirmation occurs when the two lines intersect below the zero point; when this happens, the sell signal generated is a trustworthy forex trading signal for the trader to follow.

3. Overbought and Oversold Levels RSI

Overbought RSI forex indicator readings above 70 are considered when deciding top and suitable profit-taking points.

Forex traders see RSI values below 30 as market bottom and excellent points to take profits.

RSI centerline crossover forex trading signals should confirm these oversold and overbought levels. If these regions offer a market top or bottom, the RSI center line transition forex signal should be validated. Because oversold and overbought levels can generate whipsaws in the currency market.

This is because the RSI indicator stays oversold or overbought for a long time when the currency market is strongly trending. Because the RSI forex indicator stays at these levels for a long time, these oversold and overbought areas can’t be used as forex market tops and bottoms. 

4. RSI Trend Lines

If you want to plot trend lines on the RSI, you can do the same thing you can do on the forex price charts. 

RSI trend lines are drawn on the forex trading chart in the same way that forex trend lines are marked on the forex trading chart: by connecting consecutive highs or sequential lows on the RSI forex index.

There are often RSI chart patterns that you can’t see on the forex price chart, like head and shoulders diagrams or triangle charts. These RSI chart patterns are often seen on the RSI indicator.

The RSI forex indicator also often makes forex chart patterns like head and shoulders or triangles that may not be noticeable on the forex price graph. These patterns may or may not be visible. 

5. Bollinger Band Indicator

Calculations for the Bollinger Bands forex marker use standard deviation to show the bands. The default value in use for this is 2.

The Bollinger bands The forex indicator thinks that the best default exponential moving to use to measure the Bollinger bands is a moving average of 20 periods. The bars are then added to the forex graph price action.

The forex indicator’s main job is to show how volatile the forex price action is. To put it another way, the Bollinger bands’ endpoints try to keep forex prices from moving up and down up to 95% of the time.

When you use Bollinger, you look at the closing price and the trend line of the trading price. 

The significant difference between the two forex prices is how volatile the current forex price is, compared to the moving average, which shows how quickly the price changes over time.

The volatility of the forex market will change the standard deviation of the forex indicator, which will make or break the indicator.

6. Bollinger Bands Bulge and Squeeze

In the Forex Bollinger Bands, the bands are self-adjusting. This means that the bands get bigger and smaller depending on how quickly the forex market changes its prices.

Getting the forex market to focus on Bollinger Bands is a sign that the forex price stabilizes. This is called the “Bollinger band squeeze.”

Forex traders should pay attention when the Bollinger Bands forex emphasize low standard deviation. This is a signal that there will be a breakout in the forex market price, and it shows that forex traders are changing their trade positions to make room for a new move. 

Also, the longer the forex rates stay inside the narrow bands, the more likely they are to break out.

When the Bollinger Bands widen, the forex price has broken out of the range. This is called the Bollinger Bands Bulge.

Bollinger Bands being far apart can signal that a change in the direction of the forex market is coming. 

This caused vast Bollinger bands on the downswing. In statistics, the forex trend changes when prices reach an extreme level. This is based on the theory of normal distribution. The “bulge” signifies that the forex market is going down.

7. Whipsaw Range Market

If another forex signals give a forex trading signal in the same direction as the trading signal from moving averages, then the trader can initiate a trade in the instructions given by the trend line indicator and the other forex indicator being used confirm the trading signal.

A forex trader can create a forex trading system that will assist them decide whether forex trading signal given by the forex moving average is probably to be a forex whipsaw as well as which forex signal is expected to be more dependable.

A forex trader must only enter a forex trade if the forex moving averages’ signals match the other forex statistics’ signals.

8. RSI Forex Swing Failure

For trading short-term forex moves, RSI forex swing failures might be a very reliable strategy. It can be used to trade long-term forex trends as well, although it is especially suitable to short-term forex trading, especially for reversal traders.

An indication of an impending forex market reversal is the RSI swing failure swing currency trading setup. This forex swing failure generates a leading breakout signal, indicating that a critical resistance level in the currency market will be breached. 

In an upward forex trend, this forex setup must appear at levels over 70, while in a down forex trend, it should happen at rates below 30.

The fx RSI swing failure is a prominent forex trading signal that is validated when the price breaks through the support level. 

9. Bollinger Bands and Forex Price Volatility

Increasing the Bollinger Bands width allows for other probable price action motion that falls within 95% of the mean.

This indicator will expand as FX price volatility increases. The bollinger band will bulge around the exchange price. This widening of the forex bollinger bands is a continuation pattern, and the price will follow suit. 

When forex price volatility is minimal, the width narrows to lower the probable forex price patterns movement which can fall around 95% of the mean.

Prices start to consolidate when volatility is low, looking for a breakout. It is advised to avoid forex trades while the forex bollinger bands signal is going sideways.

10. Stochastic Oscillator

The fast and slow lines of the oscillator fx signal are calculated using time intervals. The amount of time periods utilized to calculate the percent K and percent D lines is determined by the reason for which the oscillator forex indicator is being used.

A forex trader can use periods 10 to observe overbought and oversold levels when utilizing the oscillator forex indicator in conjunction with a forex trend indicator.

Forex traders should not rely just on the stochastic forex indicator to make trading decisions; instead, they should utilize it in conjunction with other fx technical indicators.

When trading the forex market in range markets, this Stochastic oscillator forex indicator can be utilized to identify overbought/oversold values as profit potential taking points.

Top Brokers in Forex Trading

Firstly, if you are interested in Forex trading, the most important thing you must do is choose the best brokerage firm to assist you in achieving your financial goals.

Roboforex

RoboForex is a renowned online trading platform that offers one of the fastest trading platforms for indices, stocks, commodities, forex, CFDs, ETFs, and cryptocurrencies. 

When compared to many other prominent brokerages, RoboForex offers several of the most competitively tight spreads starting at 0 pips and is noted for their swift order execution. RoboForex offers a variety of bonus packages and special offers to its traders, including one with a 15% cashback offer.

Vantage FX

Vantage is a certified Forex broker that connects traders to top-tier FX financial institutions. Vantage offers super-fast transaction execution and interbank-grade RAW ECN spreads. They give clients an authentic institutional trading experience across a broad range of trading instruments. 

A large number of markets are available via WebTrader, and strong MetaTrader 4 and 5 interfaces, and numerous iPhone and Android trading apps.

Markets.com

It was founded in 1999 and is an unit of a publicly traded corporation in the United Kingdom (LSE: PTEC). Markets.com is a secure (low-risk) forex and CFDs broker because it is authorized in two tier-1 jurisdictions.

The MarketsX platform from Markets.com is well-designed, simple to use, and offers a solid set of services, including advanced research, trend analysis, webinars, and instructional videos.

Final Thoughts

Australian dollar to Canadian dollar (AUD/CAD) is one of the most popular cross rates, particularly among traders who are interested in the impact of commodities on forex pairs. 

Some traders find the fluctuation of the pair to be bewildering. Still, with diligent research and an acute eye for essential information, developing a profitable trading strategy is feasible.

The AUD/CAD currency pair can provide you with a competitive advantage in currency trading. 

Still, you must grasp its fundamentals before becoming involved in trading.

Frequently Asked Questions