The Euro has had significant losses during this week’s trading and the EURAUD, the EURJPY and EURCAD have all seen their down trend continue. All 3 setups were actually mentioned in recent articles on our blog. Hopefully some of our readers were able to capitalize on these setups and opportunities.
If you took any of those setups – please let us know in the comments section!
In today’s post we revisit the EURCAD currency pair – now with a brand new trade potential. Two days ago we wrote about the EURCAD break out potential. Today our post will focus on the EURCAD pullback potential.
[tweetable alt=””]The advantage of the trend is simple: long-term continuation in one direction which often exceeds the expectations of almost all traders[/tweetable]. The EURCAD could continue with its downtrend yet again – although nothing is ever certain in trading.
The same downtrend elements are still valid:
1) DTT trend indicators are both red on 4 hour and daily chart
2) Down trend channel connecting tops and bottoms on daily chart (blue lines)
3) Price has broken below the support trend line (magenta color) for a decent breakout trade to the downside
With a downtrend in play and a firm breakout confirmed, a trader can automatically starting planning for a potential pullback trade – or what Winners Edge calls a boomerang trade setup. Before a boomerang can be traded, traders must check whether support and resistance levels could potential block this trade setup.
The EURCAD has tons of space, but the 1.44 does pose a potential challenge as the closest weekly bottom. The bounce to the upside could therefore be decently strong, and a potential entry at a higher Fibonacci retracement level would be better.
Based on the above, an entry at the 61.8% Fibonacci level at 1.4504 makes sense because it is also corresponds to the broken support level which now acts as resistance.
The stop loss needs to be above the top at 1.4567. The profit targets aim for the -61.8% target at 1.4340 and the -1.618% Fib target at 1.4210. A trail top loss is advised to reduce risk and lock in profit.
Will this trade work out just like the previous break out trade? No trade is ever 100%. There are strong signals for a trend continuation. The only drawback is the failure of price to break below the weekly bottom. That is why traders need to be cautious and use a trail stop loss – just in case price starts to make a bigger retracement.
What is the strongest advantage of this trade in your view? What is your target for this pair?? Let us know down below!
Winner’s Edge Trading, as seen on: