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Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.
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In the April 1 weekly forecast, I mentioned a EURCAD trend line break on the 4-hour chart that could produce an opportunity to get short. Less than 24 hours later a bearish pin bar formed at 1.5880.
That was the signal to get short for those interested. It’s turned out to be a profitable trade thus far with the EURCAD down as much as 415 pips since that pin bar.
However, in that same April 1 forecast, I pointed out an ascending channel on the daily time frame. The pattern stretches back to the first half of last year and has been responsible for several 1,000+ pip moves.
Although the EURCAD has lost significant ground in the last four weeks, the pair is still hovering approximately 300 pips above channel support.
Moreover, the EURCAD recently closed below the 1.5690 area. You can see how last Monday’s session encountered an influx of selling pressure above this area.
To the downside, we have 1.5510 followed by the 1.5370/80 area. So the idea, at least for me, is rather straightforward. A return to the 1.5690 resistance area would trigger an opportunity to get short for a move back to 1.5510 and perhaps 1.5370/80.
There’s no guarantee that the EURCAD will make it back there before losing additional ground. If not, I’ll stand aside as I certainly don’t want to chase.
The broader ascending channel is also one to keep an eye on over the coming weeks. Depending on how the pair reacts to channel support, it could either be an opportunity to get long or a chance to get short. Time will tell.
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