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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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Last week I pointed out a pending breakout opportunity on the EURCAD. The range that had developed between 1.5315/30 support and 1.5480 resistance was starting to get stretched, suggestive of an imminent breakout.
Due to the ascending nature of the channel and the impulsive selloff late last month, I was leaning toward a break below the 1.5315/30 area. In fact, I’m still short the EURCAD from the retest of channel resistance on June 25th.
It took sellers just 24 hours following last Tuesday’s commentary to secure a daily close (New York 5 pm EST) below the 1.5315 handle. The next 48 hours produced a drop toward that 1.5150 support zone.
However, on Sunday I stated that a bounce early this week was the likely scenario.
Here’s what I wrote:
One thing to note here is the length of the move from June 25th to July 4th. That distance was exactly 300 pips. If you measure the distance from the July 20th high to Friday’s low, you also get 300 pips (295 to be exact).
That tells me that we could see a bounce higher to start this week. And if not from Friday’s low, the pivot at 1.5150 will surely attract a bid on the way down.
And bounce it did. Hours ago the EURCAD was up by more than 100 pips from Monday’s open.
But as I stated in the second half of Sunday’s EURCAD analysis, my bearish bias is unchanged. I also mentioned how the previous support area at 1.5315/30 would likely serve as resistance moving forward.
So far, today’s high of 1.5324 is right in the middle of that zone. The Euro cross is also selling off from this area quite aggressively and is currently trading 50 pips below the current session high.
If the pair closes inside Monday’s range (below 1.5268), we would have a bearish pin bar on our hands. That would validate the new resistance area at 1.5315/30 and also keep pressure on the next critical support at 1.5150.
Additionally, there is a 1-hour ascending channel that has developed since the July 27th low. Just know that trading a Canadian dollar cross such as this on the 1-hour time frame can be tricky at best.
Key resistance remains the 1.5315/30 area with support coming in at 1.5150. A daily close below that would expose the May lows near 1.5000.
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