Not many currency pairs are trending due to the usual quietness during the summer. Luckily there are usually a couple of exceptions to this rule; whereas other pairs are close to breaking into a direction. One of those pairs could be the EURCAD.
HEAD & SHOULDERS BROKEN
The daily chart shows a long lasting uptrend which has been broken in the last couple of months. The head and shoulders (magenta and blue lines) and the break of various support lines (orange and purple) have changed the structure of the EURCAD from bullish to bearish. This reversal potential had been clearly mentioned in our articles, such as here. Obviously a downtrend has replaced the former uptrend.
DOWNTREND IN PLAY
The first and most important step when analyzing trends is taking a look at the DTT trend indicators. These indicators analyze the chart without emotions and offer a mathematical method of identifying the trend. This simple and refreshing way of looking at the trend is showing a clear down trend with both the 4 hour and daily bars marked as red.
Also, the downtrend channel (blue lines) on the 4 hour chart is well balanced and established. The angle of the channel is not too steep nor to shallow and has many hits on both its upper and lower side. Price did make a retracement within this channel back to the 61.8% Fibonacci retracement but has resumed its downward path.
The important question at the moment is: will the downtrend last? And at what point can Forex traders capitalize on the trend continuation?
The support line (orange) is a crucial barrier for the EURCAD. As soon as this support breaks, the EURCAD has a high chance of continuing its downtrend. The entry can be at the break of the trend line with a stop loss above the 4 hour top. The targets can aim for the 1.4080-1.4120 region which shows a confluence of a -1.618% and -0.618% Fibonacci targets. Be cautious of the 1.44 level however, which still could act as a horizontal support level (green).
What is YOUR VIEW on the EURCAD?
Wish you all Safe Trading!
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