One of the simplest technical patterns in existence (and one of my favorites) is the channel. However, as is the case with all technical analysis, it’s important not to confuse simple with unprofitable. In my experience, just the opposite is true.
EURCAD has been in the process of carving out two very well-worn ascending channels that offer traders guidance on where the pair may be headed in the mid to long-term. The larger of the two channels began forming as far back as August of 2012.
The weekly chart below shows the two channels in question.
Keeping with the “simple theme”, a close below the smaller channel’s support would expose the 1.4060 handle and possibly the larger channel’s support near 1.3400. As always, the daily chart below does a better job of illustrating the implications of such a break.
On the flip side, should the pair find a bid at current levels, all bets are off for a break of channel support, at least in the near-term. We’ll see what next week has to offer.
