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EURCAD: Will Post-French-Election Support Continue to Hold?

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During yesterday’s session, the EURCAD retested a level that previously served as resistance on March 27th. The level subsequently served as support on the 26th and 27th of April shortly after the first round of voting in France.

However, the pair recently closed back below the 1.4940 handle. This area dates back to January of last year, so Tuesday’s close back below it is a sign that further weakness could be in the cards.

Given the ascending nature of the channel below, we would naturally anticipate a break of support. After all, markets rarely break to the upside of an ascending channel, at least one that is considered to be sustainable.

In fact, I often use such “head fakes” as opportunities to sell should buyers fail to maintain former resistance as new support. In other words, I wait to see if the upside break of an ascending channel is false, thereby giving bears the green light to act.

Regarding the EURCAD, at the moment I’m waiting to see if buyers fail to hold the 1.4830 area on a 4-hour closing basis. If I see the pair slip back below this level, I will entertain a short position.

As for levels of interest below 1.4830, the first is the trend line that extends from the December 2015 low. That area currently resides near 1.4620.

A close below that would likely fill the gap left open from the first round of voting in France on April 23rd. The price for that gap fill is 1.4473. Alternatively, a daily close back above the 1.4940 handle would negate the bearish outlook.

For my part, there is no favorable setup at this time. With that said, a close back below the 1.4830 area could present an appealing opportunity to get short for a move back to the 1.4620 region.

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EURCAD 4-hour chart

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1 comment
June says

Thank you Justin.

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