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Featured Trade: EUR/CAD may resume its medium-term up move cycle

 Short-term technical outlook on EUR/CAD (Fri 11 Jan)

Key elements

  • The EUR/CAD has staged a pull-back of 580 pips from its 02 Jan 2019 high of 1.5790. The pull-back has managed to stall right at the medium-term ascending trendline support in place since 24 Oct 2018 low of 1.4777 and formed a daily “Bullish Piercing” reversal candlestick pattern on 09 Jan 2019. These observations suggest that the medium-term up move cycle from 03 Oct 2018 low remains intact within a longer-term major bearish “Ascending Wedge’ corrective range configuration in place since Aug 2012 low of 1.2130 (see daily chart).
  • After it hit a high of 1.5305 on 10 Jan 2019 (also coincides with the minor swing high areas of 04/07 Jan 2019, the pair has started to pull-back to print a low of 1.5201 seen in yesterday, 10 Jan U.S. session. The on-going pull-back in price action has reached 61.8% Fibonacci retracement of the recent push up from 09 Jan 2019 low of 1.5415 to 10 Jan 2019 high. In addition, the hourly Stochastic oscillator has traced out a bullish divergence signal at its oversold region. These observations suggest that the downside momentum of the recent slide/pull-back has started to wane (see 1 hour chart).
  • The next significant near-term resistance stands at 1.5370/5400 which is defined by the former minor range support from 20 Dec 2018/03 Jan 2019 and a Fibonacci cluster (38.2% retracement of the minor pull-back from 02 Jan 2019 high to 09 Jan 2019 low & 1.236 expansion of the recent push up from 09 Jan 2019 low to 10 Jan 2019 minor high projected from 10 Jan 2019, U.S. session low).

Key Levels (1 to 3 days)

Intermediate support: 1.5210

Pivot (key support): 1.5145/30

Resistances: 1.5310 & 1.5370/5400

Next support: 1.4760


If the 1.5145/30 pivotal support manages to hold, the EUR/CAD is likely to resume its potential impulsive upleg at least in the short-term to retest 1.5310 before targeting the near-term resistance of 1.5370/5400.

On the other hand, a break below 1.5145/30 negates the bullish tone for a slide back towards the 03 Oct 2018 medium-term swing low of 1.4760.

Charts are from eSignal


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