EURCAD bulls just came within a few pips of breaking out from a long-standing trend line resistance.
I mentioned the trend line that extends from the June high back on November 19th. It forms the upper portion of what could be a descending wedge of sorts.
If we use the June and September highs to draw the trend line, EURCAD buyers were close to breaking out during yesterday’s session.
You can see how this one level has rejected every advance since that September high at 1.5371.
Those rejections include the 26th and 27th of September as well as November 21st.
Yesterday’s session was different though.
Instead of backing down, buyers closed the EURCAD near session highs. That was good enough for a 1.5129 close.
Using the June and September highs to draw our trend line, I’d say the level comes in somewhere between 1.5120 and 1.5130.
As you can see, it was a close call.
In situations like this, it’s best to wait it out. EURCAD bulls will either close the pair above the 1.5120/30 area today or they won’t.
Update: Since I started writing this, buyers have given up 60 pips. That makes a positive close today much less likely.
Looking for the same New York close charts I use? Go here. These charts are essential if you’re trading price action from the daily time frame.
If buyers somehow get the job done, it would set our sights on a breakout opportunity to start next week.
And if they don’t, it would suggest a turn lower next week.
Keep in mind that there is also a horizontal level at 1.5130 that is playing a role here.
In fact, that horizontal level probably has more to do with today’s selloff than the trend line.
Notice how every EURCAD advance since mid-October has been rejected at the 1.5130 area.
With that in mind, it may not be a bad idea to require a daily close above this level if you have a bullish view of things.
Alternatively, if today finishes as a bearish engulfing pattern, we may have an opportunity to get short next week.
Just bear in mind that this is a choppy market. We’ve seen a lot of back and forth price action since October, so a breakout of some sort (bullish or bearish) is preferable.
Don’t forget that a seat on the sideline is always a viable option. That’s especially true as we move into December where the lack of liquidity becomes a concern.