*** Update January 3, 2019 - Short EURCAD Trade Targets Met ***
We entered a short EURCAD position yesterday and have exited today with both our target prices met. While the move may have more to go, the speed of the downside move in the last 24 hours will keep us on the sidelines for now.
Short EURCAD – 1.55800
Stop Loss – 1.5650
Target 1 (50%) – 1.540
Target 2 (50%) – 1.5365
The New DailyFX Q1EURand CAD Forecast s arenow available to download.
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)
IG Client Sentiment Data shows how retail investors are positioned in a range of currencies and asset markets.
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.com or via Twitter @nickcawley1.
