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EURCAD: Direction Hinges on Long-Standing Trend Line

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The EURCAD is at a crossroads. On the one hand, the pair has been quite bullish since February, but on the other, sellers are forcing a retest of a long-standing trend line.

The April 24th close above the trend line that extends from the December 2015 low triggered an explosive 600 pip rally that topped out in June at 1.5250. But as of Tuesday, sellers have erased those gains and are now pressuring the 1.4670 area for a fourth straight session.

Below is a “big picture” view from the weekly time frame.

EURCAD weekly chart

Now, it’s important to keep in mind that this level is still holding as support at the time of this writing. Also, the lack of a buy signal or daily close below support leaves us on the sideline for now.

If we get a daily close below the 1.4670 area, it could set up a favorable opportunity to get short next week. It would also pave the way for a retest of 1.4470 which would close the gap from late April.

Alternatively, a bullish pin bar on the daily chart from the 1.4670 area could present an opportunity to get long. The next resistance level above the current price comes in at the May 30th low of 1.4965.

I will follow up on the EURCAD if one of the two scenarios above materializes next week.

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EURCAD daily chart

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9 comments
Darius says

why should such trends work when even when there are candles bellow support line?

Reply
    Justin Bennett says

    Darius, that’s why I speak so highly of the daily time frame and New York close (5 pm EST) charts on this site. There’s a big difference between an upper or lower wick piercing a level and a session closing above or below it.

    Look no further than the November 16, 2016 close below the level and the April 24, 2017 close above it. Both triggered extended moves.

    Reply
R Mngadi says

Are Inside bars worthy signals?

Reply
Steve says

Hi Justin. Based on that weekly chart, the trend is up. I am on the hunt for a long. However, the level maybe the TL you have plotted, but maybe it could be lower at your next support and that gap will get filled too. Yep on the sidelines for the time being.

Reply
    Justin Bennett says

    We’ll have to wait and see what happens.

    Reply
Darius says

Also interesting thing is that oil price raised yesterday and today, so as I understand CAD should be also raising. But eur still crushed it today. Why is that would be intersting to understand.

Reply
Darius says

And one more thing I see – 14 days moving average is going down, but we are buying. Usually I do not buy when this is going down.

Reply
Priceless says

Justin Your analysis is Great! Your first scenario worked today. What next?

Reply
MIMI says

FANTASTIC TRADE and brilliant analyses by you as always Justin. Thank you to taking the time so explain and teach us how to analyse and trade in a simplistic manner! You are the best.

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