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EURCAD H1(1 Hour) Chart Analysis – Bullish Convergence, Bullish Hidden Divergence, Downtrend Line Breakout
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.
It is always recommended to look for confirmations before you jump into any trade. If you are not sure about how to trade this short term buy setup then you can use any setup and strategy that you have in your arsenal to look for bullish moves and join this buy trade.
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