EURUSD and USDCAD Reversal Days at Key Levels Shift Trading Bias’
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EURUSD rejected after trend-line breaks
The Euro was posting a solid day yesterday, trading above the trend-lines from February and September of last year as well as highs carved out last month, before turning lower to close near the lows of the session. This turnabout carved out a strong rejection candlestick, shifting focus lower.
Looking to the downside, with the way EURUSD has been trading for months now, a big down-move may not be in store but the near-term trading bias as long as yesterday’s high at 11306 is not breached, is now negative. Range conditions could persist which means the area just above 11100 could once again act as a solid floor.
However, risk is still skewed in favor of a downside breakout developing at some point given broader trend forces in place since the 2018 high. A breakdown below 11000 is seen as needed to get the Euro rolling downhill towards an eventual target of 10724, the April 2017 gap from the French election.
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EURUSD Daily Chart (Big rejection at resistance)
USDCAD turns off 17-mo t-line, bottom of range
USDCAD has been no easy handle with it lacking direction for weeks on end, but that doesn’t mean there aren’t trading opportunities still out there in the pair. Yesterday, we saw price rejected at the bottom of the recent multi-week trading range, which is in confluence with the trend-line from the end of January 2018.
It wasn’t a strong rejection like the one seen in EURUSD, but nevertheless it showed a willingness by buyers to show up at support. Barring a breakdown below 13362, yesterday’s low, look for USDCAD to try and trade back to the high end of the recent trading range, Jan ’16 trend-line, right around the 13500-mark.
Bigger picture forces still remain tentatively to the upside and as such an upside breakout could eventually develop, but traders will want to keep persistent range conditions in mind. On the flip-side, a breakdown below the 2018 trend-line would be considered a materially bearish event should such a break get separation. This will be discussed later should it become relevant.
USDCAD Daily Chart (rejected at support)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.