The Born Losers
The EUR/CAD is currently channeling on our daily chart offering great direction trend trading opportunities. The channel is well established with resistance and resistance holding on multiple occasions (see chart). Currently the pair is trading 8% higher off its yearly low established at 1.2778 on January 10th. As the pair carves out higher highs and higher lows, we can continue to look for buying opportunities on the pair.
Over the past week, fundamentals have changed dramatically for both currencies. Rumors of Greece leaving the Euro Zone (EUR) and Oil prices falling 17.5 %( CAD) last week has caused a selloff of both currencies against the Buck. Seeing as neither currency has a clear advantage fundamentally, it will be key to keep an eye on the Economic Calendar this week for any dynamic shifts in either currency.
Closing in to a 8Hr chart we can see our price channel at work. Price is currently holding above support at our .786 Fib Line at a price of 1.3807. This Fib Line is referring to our previous move higher from April 19th to May 9TH. The .786 Fib Line is considered the fib of last resort, matches up well with our established trend line lending another cause to find support on the EUR/CAD. Sellers will wait idly by for a breakout if this level fails to hold.
My preference is to look for buying opportunities as close to the trend line as possible. The CCI Indicator will be used as a trigger confirming support. I want to wait for the indicator to trade through the -100 oversold levels prior to entry. Our initial stops should be set below our .786 Fib Line under 1.3800. Our target can be set at 1.400 or better for a clear 1:2 Risk/Reward level.
Walker England contributes to the Instructor Trading Tips articles. To receive more timely notifications on his reports, email firstname.lastname@example.org to be added to the distribution list.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.