Hi Traders! EURCAD short term forecast follow up and update is here. On May 19th I shared this “Technical Analysis – EURCAD Short Term Forecast” post in my blog. In this post, let’s do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Traders Academy Club. Spoiler alert – free memberships are available!
My Idea:
Looking at the H1 chart, we could see that the price which was moving lower has reached a strong support zone, respected it and bounced higher from this zone. Also, we should note that the price which was in a bearish trend so far creating series of lower highs, lower lows has created higher highs for the first time in a while which we may consider as sign of a possible trend change. In addition to this, the price which was moving lower created a bullish divergence that has formed between the first low that has formed at 1.34177 and the second low that has formed at 1.33896 based on the MACD indicator. The price then moved higher and broke above the last high at 1.35010 creating higher highs, thus forming a classical setup of bullish divergence followed by bullish convergence. Hence as per the book scenario, after a bullish convergence, we may look for corrections to happen and then further continuation to the upside. Currently, it looks like a correction is happening. Also, the price which is currently moving lower has created a bullish hidden divergence that has formed between the first low that has formed at 1.33896 and the second low that has formed at 1.34497 based on the MACD indicator we may consider these as evidences of bullish pressure. So based on all this, until the strong support zone (marked in blue) holds my short expectation is bullish here and I expect the price to move higher further. A valid breakout above the most recent downtrend line would be the validation for this bullish view.
EURCAD H1(1 Hour) Chart Current Scenario
In this pair my short term view was bullish and I was expecting the price to move higher further. Also I mentioned that “A valid breakout above the most recent downtrend line would be the validation for this bullish view”. The validation for the short term bullish view which is a valid breakout above the most recent downtrend line happened here as per the plan. We then had a pullback and then the price moved higher further as I expected it to and delivered around 350 pips move to the upside!
You can see this move clearly on the M15 chart below.
On the H1 chart, the market provided us with various facts supporting this short term bullish view. We had a bullish convergence, followed by a pullback with the price creating a bullish hidden divergence. The price then moved higher and broke above the most recent downtrend line, we may consider these as facts provided by the market supporting this short term bullish view. Then as you can see in the image above how the price moved higher after that and provided an excellent move to the upside!
So traders, when it comes to trading, there are various important factors that we need to pay attention to, just because we have a good setup doesn’t mean that we can enter the trade randomly and it will pay us huge profits. First of all, we need to validate the entry and we should have a perfect entry plan to get into the trade which is a key factor when it comes to trading. This EURCAD short term forecast is yet another good example of this scenario.
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Happy Trading!
Arvinth Akash
Traders Academy Club Team
