Yesterday I commented on what could be a significant top for the GBPCAD. The pending head and shoulders pattern boasts a 1,500 pip objective if confirmed which seems likely given the recent selloff.
The pair’s counterpart, the EURCAD, has formed a similar pattern. That isn’t surprising given that the two share the Canadian dollar and the fact that the Euro and pound have some similarities of their own.
But I’ll save the potential head and shoulders on the EURCAD for another day. For now, I want to provide a brief update to Sunday’s forecast.
In that post, I illustrated an ascending channel that extends from the May 2018 low. The idea was to wait for a close below channel support before considering an entry.
Unless yesterday’s close turns out to be a false break or if channel support is somewhere other than where I think it should be, the EURCAD has broken down. Feel free to view the channel below on the 4-hour time frame to get a better sense of where things stand.
As long as 1.5350/60 holds as resistance on a daily closing basis (New York 5 pm EST), the Euro cross is vulnerable.
The first support level to keep an eye on comes in at 1.5210. Apart from the June 14th close, this level has served as a pivot throughout 2018.
A daily close below that would expose the 1.5000 area which also happens to coincide with neckline support. More on this confluence of support if and when the EURCAD reaches the 1.5000 handle.
Alternatively, a daily close back above the lower boundary of the channel at 1.5350/60 would negate the bearish outlook.
Given Wednesday’s U.S. holiday, things may be a bit slow until Thursday’s session. Then again, in these markets, it’s the unscheduled event risk that you have to prepare for, so stay vigilant regardless.