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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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The EURCAD is in the process of testing a significant support level that extends from the 2017 low. It connects with the lows from September of last year along with the January 9 bullish pin bar.
In fact, this level is the lower boundary of a multi-year ascending channel.
I’ve been bearish the EURCAD for several weeks now. It began with the April 16 commentary where shorts were favored below 1.5690.
That area came under pressure from buyers on April 23. After carving a session high of 1.5713 on the 25th and forming a bearish engulfing day in the process, the EURCAD sold off aggressively.
Then on April 30, we looked at an intraday channel that hinted at the pair’s intent to retest 1.5370. That retest materialized just two days later on the 2nd of May.
And if those two opportunities weren’t enough, the EURCAD formed a bearish pin bar below the 1.5370 handle just two sessions ago.
So here we are, retesting a level that looked like a prime target even when the pair was trading 700 pips higher at 1.5945.
As long as long-term channel support just above 1.5200 holds on a daily closing basis (using a New York close chart), the pair will remain well bid. Key resistance from here comes in at 1.5370.
However, if buyers lose the 1.5200 handle on a daily closing basis, we could see the EURCAD start to slip once more. Key support below 1.5200 comes in at 1.5000 followed by 1.4730/40.
Keep in mind that Canada reports employment figures on Friday at 8:30 am EST, so we could see an increase in volatility during this time.
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