I mentioned EURCAD as a pair to watch at the beginning of the week. However in that commentary I said to watch for bullish price action on a retest of 1.3388.
Well guess what? We never got that retest. Instead the bulls decided to cap losses at 1.3470 and push the market higher from there.
But any good price action trader knows that there is always more than one way to trade a pair in this situation. In fact the level that I’m about to share with you is even better than the previously mentioned area at 1.3388.
The level I’m referring to is 1.3765. If you follow me on Twitter this probably isn’t the first time you’re hearing about this as I have mentioned it several times recently. It was also pointed out in the weekly forecast as a key resistance level to keep an eye on.
While we normally look to sell at resistance, this time is a bit different. I’m seeing a lot of bullish momentum in the Euro and with the Canadian dollar struggling at current levels we could see EURCAD break this level over the coming sessions.
In addition to presenting a breakout opportunity, a daily close above 1.3765 would also hint at the possibility of a confirmed inverse head and shoulders pattern. In which case a move back to the 2015 high of 1.4488 isn’t out of the question.
Summary: Wait for a daily close above 1.3765 and then watch for a retest as new support. Key resistance comes in at 1.4080 with the potential for a measured objective at 1.4488.