EURCAD – Big Topping Formation, Buyers Beware
- Canadian Dollar (CAD) looks poised for a sustained rally after long decline
- EURCAD setting up the best of the CAD crosses
- Head-and-Shoulders top points to a decline of 600-700 pips once below 1.50
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When I say ‘CADplex’, I am referring to all currencies vs. the Canadian Dollar (CAD). Today, however, I will focus on one pair in particular because of how clear the chartscape is – EURCAD, you're up. It's not a cross which comes up every day, but when it does I pay attention. Like many cross pairs it can be a big mover offering nice, clean technical set-ups. This pair has rallied smartly since August of 2012 and done so with three upward channels paving the way. Now, I'm by no means a disciplined disciple of the Elliot Wave Principle (EWP), but when clean sequences in price present themselves my interest is piqued. (See chart.) Add in the distinct possibility of a Head-and-Shoulders (H&S) top and we have a chart worth placing squarely in our cross-hairs. (Note: usdcad/gbpcad also have fairly clean HnS formations. If a broader top is in place in this group then I will look to take short entries in the pairs with the cleanest short-term set-ups.)
A daily close below 1.50 will take the likelihood of seeing follow through on the H&S pattern from potential to probable. A measured move from the neckline points to a move lower to 1.43 – 1.44. The measured move target was calculated by taking the width of the pattern and subtracting it from the neckline. Again, this trade is sitting in the queue at the moment and the pattern could get a bit more complex before taking shape, but it's a good idea to have your plan in place before the race begins rather than after the starting shot has been fired....
EUR/CAD - Daily
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