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EURCAD Bounces From Support, Eyes Twelve-Month Trend Line

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I last mentioned the EURCAD on November 17th shortly after the pair had broken below the trend line that extends from the December 2015 low. The idea was to watch for a retest of former trend line support as new resistance.

Unfortunately, a rounded retest never materialized which kept us on the sidelines. But the aftermath of yesterday’s session leads me to believe that we may get a move toward the 1.4440/50 area after all.

The bullish engulfing candle that formed as a result of yesterday’s volatility could trigger a bounce higher from current levels. Furthermore, the candlestick pattern formed at the 1.4050 support level that I mentioned in last month’s commentary.

Yesterday’s move accomplishes two things:

  1. It tells us that 1.4050 is indeed a significant level and worth having on our chart
  2. The bullish engulfing candle puts the focus back on the 1.4440/50 area

This combination leaves us waiting for a move back toward the twelve-month trend line. Any sell signal from this area could offer a favorable opportunity to get short with a target of 1.4050.

A close below the 1.4050 handle would open the door for a move toward 1.3760. This level was the neckline of the inverse head and shoulders pattern that formed between March and May of last year.

Alternatively, a daily close back above new trend line resistance near 1.4440/50 would negate the bearish bias.

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eurcad-range

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5 comments
sam says

This is a temporary retraction, considering the Euro-area economic situation and political uncertainties (Greece, German, Italy, France and Brexit). The EURCAD long-term economic outlook is bearish, especially with resurgence in the Canadian economy growth rate, further fueled by OPEC successful consensus. So once investors and business decipher current economic position of the Euro-area and non-OPEC agree to cap production this week. We should see 1.3742 going forward.

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    Alexsor says

    It seems to me price action analysis considers only сrowd psychology and market sentiment expressed in the price on the chart. BUT does not consider fundamental analysis such as countries growth rate, OPEC desicions, etc.
    Today You see EU problems, but tomorrow probable Canada could face with more problems.
    We just move together with price which shows us movement of “fat and clever traders” who knows more than ordinary people.

    Reply
      Justin Bennett says

      Alexsor, that’s correct. There are only three general approaches to trading – technical, fundamental or a blend of the two. What we do here at Daily Price Action is 100% technical.

      Reply
      sam says

      An input like this help buttress the general economic outlook and nullified possible noise PA won’t decipher due to crowd psychology ‘herd’. While I respect, Justin grasp of PA. He used more approach than average traders can quantify. You can see what I said above happened even when the chart showed mid-bullish, why because of Euro-area (ECB) decision to extend QE till December 2017. So this is no issue as Justin is an amazing trader.

      Reply
Adeniji Mustapha Opeyemi says

nice commentary Boss, i will like to know your view onpounds pairs ,especially GBP/AUD ,noting, the way the pair closed today ,in respect to resistance zone 1.7045

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