EURCAD broke an important up-move trend line on the daily chart few days back, and moved lower as shown below. Now, I think we should be looking for sell opportunities as the pair is testing the broken trend line again, which may act as a resistance for EURCAD.
Looking at the 4 hour chart, the pair formed a bearish flag after the drop down, but broke the flag to the upside, and about to test the broken trend line. I think as long as the pair is trading below this trend line it should move down again.
EURCAD is already showing signs of exhaustion as RSI is at the extreme levels on the 1 hour chart as shown below. So, one may enter a sell trade at the market price if below the trend line at around 1.3910/20 or wait for the pair to bounce again to enter a sell trade. Remember, EURCAD needs to be below the broken trend line for our trade to be valid. Initial target should be the 20 moving average on the 4 hour chart, and final target could be around daily 20 moving average. Stop should be triggered on 4 hour close above the broken trend line.
Reviewing yesterday’s events and trades
There was a relief rally for the US dollar yesterday after major losses. US dollar recovered some ground against GBP, AUD, JPY and NZD. US Initial Jobless claims data and US existing home sales data came better than expected yesterday, which overall boosted US dollar in short term. Initial jobless claims fell to 309K, existing home sales gained 5.48M and Philadelphia Fed manufacturing index jumped to 22.3 beating the expectations of 10.0.
Fundamental Outlook for the day
Today is the last trading day of the week, and some profit taking moves can be seen. There is no high-risk fundamental event scheduled from the US today. However, Canadian Inflation data is lined up later in the US session, which can bring some volatility in the market. FOMC member Bullard will also be speaking later, and any remarks on QE would be interesting. I would prefer not to chase any false moves going into the weekend. There will also be elections in Germany in the weekend, and Euro crosses may open with some gap. So, be careful if you are planning to carry any trade over the weekend.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EURGBP, GBPUSD, USDCAD, GBPCAD, EURJPY, NZDUSD, EURNZD, GOLD and SILVER.
Get it HERE: Vladimir’s Markets Forecast
Have a great weekend friends. Happy trading!
