- EURCAD eyeing near-term resistance - pullback to be viewed as opportunity
- Updated targets & invalidation levels
- Looking for more trade ideas? Review DailyFX’s 2017 Trading Guides. Join Michael for Live Weekly Trading Webinars on Mondays at 13:30GMT (8:30ET)
Technical Outlook:EURCAD is responding to initial resistance. We discussed this setup at length in today’s webinar and heading into the start of the week the risk remains for a pullback lower sub-1.4428/50 before resumption of the broader advance seen off the February lows. Remember, we’re working under the assumption that EURAUD is undergoing a behavioral change with a topside breach of the larger descending formation off the 2015/2016 highs favored.
Key support & bullish invalidation rests at the 1.42-hanldle with a breach higher targeting a key resistance confluence at 1.4533 where the 50% retracement converges on former trendline support extending off the 2016 highs- a close above this region would be needed to open up the next big leg higher for EURCAD.
Notes: A closer look at price action highlights an overshoot of the median-line / December highs with the pair pulling back today in U.S. trade. Look for initial support at 1.4248/68 backed by near-term bullish invalidation at 1.4176- both levels of interest for possible exhaustion / long-entries. A breach of the highs still has to contend with the upper median-line parallel (blue) converges on the August lows at ~1.4428/50.
From a trading standpoint, I’ll be looking immediately lower with a pullback into the lower support objectives to offer favorable long-entries. A quarter of the daily average true range (ATR) yields profit targets of 23-27pips per scalp. Added caution is warranted heading into the Netherlands elections & Eurozone CPI later in the week with the events likely to spark increased volatility in the euro crosses.
Relevant Data Releases
Other Setups in Play:
- Strategy Webinar: USD, EUR Crosses in Focus as Markets Await Yellen
- Crude Prices Eye Initial Support Following Break of 2017 Range
- EUR/USD: Post-ECB Recovery to Face U.S. NFP
- Nikkei 225 Battle Lines Drawn- Key Levels to Know
- Weekly Strategy Webinar: USD Volatility in Focus
- Written by Michael Boutros, Currency Strategist with DailyFX