The last time we discussed the EURCAD, it was trading near trend line support that extends from the December 2015 low. Although the level didn’t break, the bullish pin bar that resulted on October 19th signaled that the level is worth keeping on our watchlist.
Since that bullish signal, the pair has gained 500 pips. The combination of Euro strength and Canadian dollar weakness during this period has fueled the rally efforts.
Here’s a view of that trend line from the daily chart:
Note that the formation above could also be a broader topping pattern of sorts. See the October 17-21 Weekly Forecast for details.
Although the pair has regained some lost ground recently, the 1-hour chart below shows a pattern that could signal weakness over the coming sessions. An ascending channel this narrow can lead to an aggressive move in the opposite direction but only with a confirmed break, which hasn’t happened just yet.
It also makes sense that the pair would encounter selling pressure near 1.4900 as this area capped advances in both September and October. That doesn’t mean we won’t see higher prices from here, but it is an area of resistance, albeit a minor one.
If buyers manage to overcome the 1.4900 region, the next level of resistance isn’t far away at 1.5000. But regardless of where the bulls eventually fold, I won’t be interested in a selling opportunity until the pair closes below channel support.
A close below channel support would re-expose the December 2015 trend line in the chart above. That area now comes in between 1.4420 to 1.4450.
Keep in mind that Canada reports employment figures on November 4th at 8:30 am EST, the same time as US non-farm payroll.
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