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Over the weekend I discussed a resistance area on the EURCAD that could trigger a reversal. The region stretched from 1.6100 to 1.6150 and included a horizontal level from 2016 as well as ascending channel resistance from the May 2017 highs.
Fast forward to today, and we can see that the Canadian dollar cross is trading nearly 200 pips below that resistance area. In fact, Tuesday’s session reached a high of 1.6151 before plummeting 150 pips.
I mentioned another Canadian dollar cross just yesterday. The NZDCAD had broken below ascending channel support at 0.9390 and is currently trading at 0.9296.
If you believe the Canadian dollar is headed higher but missed those opportunities, there is another level on the EURCAD that could offer a favorable entry.
Notice how the pair recently came into trend line support from the February 23 low. Although this is a less significant trend line than we’re used to, there’s no denying the effect it’s having on the EURCAD as I type this.
The trend line shown below has also formed a rising wedge of sorts when combined with ascending channel resistance from the May 2017 highs. This leads me to believe that the next move will be toward 1.5760.
But just like any technical formation, it’s essential to wait for confirmation. For the EURCAD pattern below, that means a 4-hour close below trend line support.
Keep in mind too that today at 2 pm EST we have a Fed rate decision and statement. So not only do we need to wait for sellers to clear 4-hour trend line support, but we should also wait for the dust to settle from today’s rate decision.
If EURCAD sellers can clear the 1.5930 area, I will start watching for a selling opportunity on a retest of the level as new resistance. Key support comes in between 1.5690 and 1.5760. A close below 1.5690 would expose 1.5380.
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