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I first mentioned the EURCAD wedge pattern on November 19th.
At the time, we didn’t have the short-term trend line support you see in the chart below. That’s a new development as of yesterday.
But even without that lower level at 1.4950, the descending nature of the price action since June had a bullish tilt to it.
I was by no means bullish EURCAD though. And that hasn’t changed.
It’s still going to take a daily close above the 1.5130 resistance area to convince me buyers are ready to push prices higher.
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Until then, this consolidation period will continue.
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This new short-term trend line does give us a fresh perspective though.
If buyers fail to take out 1.5130 resistance, a daily close below trend line support near 1.4950 would be bearish in my opinion.
It would also expose recent lows including 1.4850 and perhaps 1.4750.
Now, if EURCAD marches higher this week and retests resistance, there’s a good chance we’ll see a break higher.
Repeated retests of a level often foreshadow a breakout. EURCAD would not be an exception to that rule.
So far, we’ve already seen two retests of resistance in the last two weeks. A third one this week would be slightly bullish in my opinion.
It’s also no secret that I’m not overly fond of buying the Canadian dollar.
I wrote about the CADJPY ascending channel on the 20th of November.
Buyers are keeping their heads above water for now, but overall the price action since March looks relatively bearish.
As for EURCAD, a daily close above the 1.5130 resistance area would open the door to 1.5320. A close above that would expose the June high at 1.5580.
Alternatively, a daily close below short-term trend line support near 1.4950 would pave the way for a move to 1.4850 and perhaps 1.4750.
As such, it’s best to prepare for both outcomes so you can react accordingly when the time comes.
Justin Bennett is an internationally recognized Forex trader with 10+ years of experience. He's been interviewed by Stocks & Commodities Magazine as a featured trader for the month and is mentioned weekly by Forex Factory next to publications from CNN and Bloomberg. Justin created Daily Price Action in 2014 and has since grown the monthly readership to over 100,000 Forex traders and has personally mentored more than 3,000 students.Read more...
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