The markets finally decided to pick up the pace today, especially for two of the setups we covered yesterday. CADJPY and EURCAD definitely stole the show today, moving 85 and 155 pips respectively.
So where to from here?
I was surprised to see CADJPY close above the trend line from last year. I thought the pair would likely close the day below 94.70. For anyone looking to enter or add to this position, it’s a little tricky.
I say that because unlike a really clean horizontal level where all lows or highs line up perfectly, trend lines that extend this far back can be open to interpretation. In other words everyone’s line looks a little different, and the slightest difference can mean 15 or 20 pips.
Provided the trend line on my chart is up to pair with the majority, I’d say we broke this level today and any pullbacks should be well-supported between 94.60 and 94.70.
The next key level to the upside is 95.80, which is marked by several highs and lows over the last year including the 65 pip gap back in April of last year. Large gaps like this can be a great place to look for support and resistance levels.
EURCAD had a huge day, dropping 155 pips from the high. We covered this setup here based on the bearish pin bar that had formed.
Speaking of clean levels, the 1.467 level is a perfect example. We have two recent lows from June 12th and 16th that line up almost perfectly. This level is also 50% of today’s move.
This could be a nice place to look for an entry or add to an existing position as I’d expect any move higher to be well-capped below this level.
Putting things in perspective, here is the EURCAD weekly chart. As you can see the 10 and 20 EMAs have crossed which is the first time since 2012.
The 1.444 horizontal level also lines up nicely with the trend line from August of 2012.
I’m still watching NZDJPY as I think it still has something left in the tanks. It did break the inside bar low from yesterday, but today’s close was promising for the bulls as it held above 88.65.
This is the “line in the sand” so to speak. If the market breaks down below this level then I’ll consider the market to be in transition, at least for the short term.
