EUR/CAD at risk of a major bearish breakdown as ECB looms

Watch EUR/CAD downside trigger level of 1.4600

Short-term technical outlook on EUR/CAD (Thurs 25 Jul)



click to enlarge charts

Key elements

  • The EUR/CAD cross pair has continued to inch lower by -9.58% from its major range resistance at 1.6105. Right now, it is testing a major ascending trendline in pace since Aug 2012 low now acting as a support at 1.4600.
  • The minor impulsive down move sequence in place since 01 Jun 2019 high of 1.5161 remains intact with key short-term resistance at 1.4730 (also 23.6% Fibonacci retracement of the entire decline from 01 Jun 2019 high to 16 Jul 2019 low). (see 4-hour chart)
  • Shor-term momentum remains negative as indicated by the 4-hour RSI oscillator where it has broken below a corresponding support at the 44 level.
  •  The next significant near-term support rests at 1.4500 which is defined by the lower boundary of the minor descending channel from 01 Jun 2019 high and a Fibonacci projection cluster.

Key Levels (1 to 3 days)

Intermediate resistance: 1.4675

Pivot (key resistance): 1.4730

Supports: 1.4600 & 1.4500

Next resistance: 1.4875

Conclusion

If the 1.4730 key short-term pivotal resistance is not surpassed and a break below 1.4600 reinforces the continuation of the minor impulsive down move to target the next support at 1.4500 in the first step.

However, a clearance with an hourly close above 1.4730 negates the bearish tone to open up scope for a corrective rebound towards the 1.4875 resistance (also the 50% Fibonacci retracement of the entire decline from 01 Jun 2019 high to 16 Jul 2019 low).

Charts are from eSignal



Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.