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EURCAD Challenges Key Resistance at 1.5160

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Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.

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EURCAD looked ready to move south following the confirmation of the head and shoulders pattern earlier this month. I mentioned the structure several times in the last few weeks, and by the end of the August 14th session, sellers had confirmed it.

We then had the retest of the level as new resistance between the 16th and 20th. However, by the close on the 21st of August, buyers were back in control.

I rode the EURCAD short from late June at 1.5580 to the August 21st rally. For the record, I did announce that entry in the member’s area. The intent was to add to the position for an eventual move to the 1.4500 region.

The market clearly had other plans. That’s okay though because I had already accounted for the possibility of a failed head and shoulders pattern. So although it wasn’t the ideal outcome, the close back above the neckline wasn’t a total surprise either.

I also made out pretty well. It wasn’t the 20R+ I had in my sights, but the result was still better than 10R, so no complaints here.

Now, every good trader knows the ability to turn on a dime is paramount to one’s success.

What do I mean by that? Essentially, loyalty to a position is a bad thing. I’m paraphrasing Jack Schwager, author of Market Wizards.

You never want a market to reverse on you as the EURCAD did to me recently, but that’s how things go sometimes. The only thing worse than being wrong is staying wrong. In other words, hoping for the market to prove you right.

With that in mind, the EURCAD closing back above what appeared to be a neckline on August 21st was a red flag for bears. It was a sign that buyers were back in control which has been furthered by the last few sessions.

The EURCAD is now challenging 1.5160 resistance. It’s been a key pivot since May, so it only makes sense that this would be a critical battleground between buyers and sellers.

If the pair closes above 1.5160 (New York 5 pm EST), a retest of the area as new support should attract an influx of buying pressure. Key resistance comes in at 1.5315 followed by 1.5450.

Alternatively, bearish price action from 1.5160 would keep pressure on key support at 1.5000.

I won’t attempt trading this on anything lower than the daily time frame. A pair like EURCAD has trouble respecting levels on the intraday time frames, so there’s no sense in trying to force something before the session close at 5 pm EST.

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EURCAD support and resistance levels

Leave a Comment:

20 comments
Emuobo says

Spotted it too. Thanks.

Reply
    Justin Bennett says

    You’re welcome.

    Reply
Huy says

hãy chở nến đóng cửa!

Reply
Andrea says

Hi Justin. The false break of the supposed neckline has already invalidated the head and shoulder or the pattern can still materialize?

Reply
    Justin Bennett says

    The head and shoulders was invalidated, but that doesn’t mean the EURCAD can’t move lower. I’m still relatively bearish. However, timing is critical.

    Reply
      andrea says

      Thank you

      Reply
papi says

i see GBPCAD is also testing resistance

Reply
    Justin Bennett says

    Correct. 1.6820 that I mentioned a while back.

    Reply
Steve Wangaru says

Thank you for your insightful analysis. Am learning and reaping fruits from it!

Reply
    Justin Bennett says

    You’re welcome.

    Reply
Zulfikar says

You are Genius Justin!!

Reply
    Justin Bennett says

    Cheers. 🙂

    Reply
Stephen says

hi mr. Justin, how do you trade trend line or support and resistance break? do you enter on the close below or above the line or do you wait for a retest? if you waited for a retest ,would you also wait for a certain candlestick pattern to form or you would enter when the price touches the line or comes close to it? in either case , where would your stop loss and take profit go? thanks

Reply
    Justin Bennett says

    That’s a mouthful. We discuss all of that and more in the member’s area.

    Reply
Pierre Mifsud says

I tend to disagree here, as the H4 works very well here too. The 1.5160 is a significant 0.382 on the daily, for this reason the resistance. Yes the violation of the head and shoulder will only prolong the fall to the 1.45 handle but based on wave harmonic the bearish pattern is still intact. Once the 1.5580 handle is broken then definitely bullish

Reply
    Justin Bennett says

    I wouldn’t call that a disagreement to what I wrote. I’m in no way bullish the EURCAD. Maybe I didn’t explain myself well enough.

    Reply
      Pierre Mifsud says

      But you said that you would not attempt trading this on anything lower than the daily time frame….I simply said that the H4 works also well with it.

      Reply
        Justin Bennett says

        Got it. Thanks for clarifying.

        Reply
derrick says

thank you very much sir

Reply
    Justin Bennett says

    You’re welcome.

    Reply
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