Short EURCAD – 1.55800
Stop Loss – 1.5650
Target 1 (50%) – 1.540
Target 2 (50%) – 1.5365
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EURCAD in Overbought Territory
We look to go short of EURCAD with a tight stop as the pair starts to move out of overbought territory, using the RSI indicator at the bottom of the chart. A lot of the recent uptick in EURCAD has been due to a weak Canadian dollar on the back of plunging oil prices. With this market now stable, and with recent Eurozone data highlighting ongoing economic weakness, the fundamental backdrop suggests a short EURCAD position for a short-term trade. The Bank of Canada also meets next week – all monetary policy settings are expected to remain unchanged – so we look for a short time frame for this trade ahead of the meeting.
On the technical side, as well as being overbought, the pair struggled to break through the 23.6% Fibonacci retracement level with a great deal of conviction and is likely to move lower. We go short at the current spot price around 1.5580 and set our stop loss just above the recent 9-month high at 1.5650. We target the December 26 low at 1.5400 and the 20-day moving average at 1.5365.
EURCAD Daily Price Chart (February 2018 – January 2, 2018)
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Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.
What is your view on EURCAD – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.comor via Twitter @nickcawley1.
