EURCAD: 440-Pip Opportunity Ahead?

by Justin Bennett  · 

November 19, 2018

by Justin Bennett  · 

November 19, 2018

by Justin Bennett  · 

November 19, 2018

It’s no secret that EURCAD is well off its year-to-date high. In fact, even after last week’s rally, the euro cross is off its March high by more than 1,000 pips.

However, the pair has actually been trending higher since the 2012 low.

EURCAD monthly uptrend

It isn’t the cleanest rally, and EURCAD can be volatile at times, but it’s a clear uptrend nonetheless.

Now, there’s no telling whether the selloff earlier this year was the last gasp from buyers.

But we’ve seen this before from EURCAD. Just look at the monthly chart above.

One month it looks as though the pair is ready to roll over. And the next bulls are extending the price by another 500 pips or more.

For the past several months, EURCAD has carved a pattern that could suggest another push higher.

You probably know I’m a big fan of channels and wedge patterns. They’re incredibly versatile and offer precise entry points if you play your cards right.

Furthermore, they make it easy to determine a final target.

In the case of either a channel or a wedge, the final target is almost always the inception point of the structure.

More on that in a moment.

A study of the recent EURCAD price action shows what could be a falling wedge. Resistance extends from the June swing high while support began in late May.

I say “could be” a falling wedge because we don’t yet have a confirmed break. For that, buyers need to secure a daily close above wedge resistance.

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At the moment, that resistance level is up near 1.5140. That could change depending on how long it takes EURCAD to climb another 70 pips.

So until EURCAD bulls close the pair above resistance, there is no opportunity here in my opinion.

With that out of the way, let’s talk targets.

If buyers can get the job done, the first target would be the September highs at 1.5320. You can see how the level has served as a pivot since early June.

Now, remember what I said about the final target?

For a wedge like this, the final target would be the pattern’s inception point. That would equal a move to 1.5580 or about 440 pips above the wedge resistance marked below.

That leaves the market with plenty of room to run.

I’ll be adding this one to my watchlist. I will also provide updates as things unfold, but step one is a move to and close above the 1.5140 resistance area.

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EURCAD falling wedge pattern

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  1. “One month it looks as though the pair is ready to roll over. And the next bulls are extending the price by another 500 pips or more.”

    The pair is sensitive to so many factors, Oil, Brexit, Euro economic standing etc. Currently, EURCAD rebounded because of falling crude oil, despite the uncertainty surounding Euro – Italy budget issue and slowing growth (0.2 percent growth in the third quarter). In fact, the first leg of pull-back started in April when US and Canada agreed to discuss NAFTA. Since then global uncertainty has dictates the direction of the pair. Therefore, failure of Theresa May to convince the parliament to approve draft Brexit agreement or even got impeached as some lawmakers are already gathering signature to remove her. This pair will rain.

    Still, the loonie is not attractive presently because of so many factors, flatttening yield curve that made it impossible to invest on long term project, continuous rate increase to meet 3 percent target of BoC. Hence, it will take major issue in Europe to pressure the paire below 1.47 level.

    1. Thanks for commenting. As always, I’ll let the market do the talking.

      I also don’t pay attention to anything you mentioned. I never have. The only thing that matters to me is the price action.

      1. You do pay attention to some of the things mentioned; one latest example: ‘The continuous flow of Brexit rhetoric has really disrupted things. In fact, it’s made GBPUSD downright dangerous to trade.’

        Awareness of the currency narrative and fundamentals can lend confluent support to a trade idea and keep a trader away from false signals.

        1. Knowing that Brexit-induced volatility has disrupted a market’s technical landscape is not fundamental analysis. It’s just common knowledge.

        2. At the end of the day if you need to be successful you need to believe just in your strategy…..that is what trading is all about…..not what other people’s nonsense say……So I am with Justin on this! The news will never help you in trading….it might be influential for a short time but NOT for the 4 hourly and daily time frames

        3. Even if you know the fundamentals and the narrative surrounding the currency and what the political or economic climate its in, if those factors aren’t reflected in price, they can be ignored. And many a time, it does happen. Because for every narrative there can be a counter narrative that you may or may not be aware of just like there is bulls and bears in every market.

          So price action is the reflection of the fundamentals – the end product.

          I think the best is following the price action because its the most important while observing what’s going on at the same time.

      2. Good afternoon Justin: Thanks as always about your astute insights and staying focused with your strategy of price action guiding the path. Take care of yourself and bye for now. Cheers.

          1. Just noticed the comments, I have known Justin for awhile now and even exchanged emails. I know he doesn’t do fundamental or care about it, however, it doesn’t matter. I like his work and jump on it on linkedin for two reasons: It is Justin, a man that knows his onions. Two, I have good macro view of the pair. So its about possible challenges and opportunities, not fundamental or technical.

          2. Trading is all about understanding and recognising probabilities created by a market and running with them for as long as they remain viable. Anything that helps a trader identify probabilities and their lifespan shouldn’t be disregarded, especially if it is likely to increase profitability over time.

            Technical analysis alone can generate lots of false signals for inexperienced traders, who really would be best served by a more complete understanding of the markets before they engage for real, which can be achieved by knowing as much as possible about the different ways of analysing.

            Is it not the case that price action is merely an overall reflection of sentiment, manipulation and what is fundamentally happening in a market, and so awareness of those forces should ultimately help with success?

            I agree that Justin’s technical skills are superb, but I have observed that he does indeed take notice of other non technical factors.

          3. Permit me to call you Allen Iversion, The Outlier. Outliers are the very few evading ‘herding’ by staying ahead. Like we say, whatever can not be explained by chart, check fundamental. However, that is usally after losses.

            And yes, you are right Justin sometimes use non technical factors like CPI, FED happenings, RBNZ, etc

  2. please i’m new to forex but i came across this article and its really a deep insight. so please i want to know, when is it okay for me to buy this currency pair?

  3. Hey Justin, i’m actually going short on this pair because there is a Descending triangle formation along with strong bearish trend. Price action wise we have many gravestone doji’s formed or small pin bars. Buyers also show they are weak from small pullbacks to resistance. We also have triple confluence with resistance, we have horizontal resistance at 1.5135 along with trend line resistance and a 0.382 fib resistance.

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