I’m seeing a textbook break and retest situation on the daily chart of EUR/CAD!
Will this potential support zone still hold or will we see a breakout this time?
EUR/CAD: Daily
EUR/CAD Daily Forex Chart by TradingView
Last week’s crude oil rally propped the commodity-related Loonie higher against most of its forex peers, allowing EUR/CAD to retreat from its 1.5200 highs.
The pair is down to the 50% Fibonacci retracement level on its latest upswing seen on the daily time frame. A larger correction could reach the 61.8% Fib, which is also around a former resistance area and the rising trend line that’s been holding since October last year.
Can the long-term area of interest still keep losses in check?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the euro and the Canadian dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!The 100 SMA is above the 200 SMA to suggest that the path of least resistance is to the upside or that the climb is more likely to resume than to reverse. In addition, these moving averages are near the trend line and S1 (1.4790) to add to its strength as a potential floor.
However, a break below this region and long bearish candlesticks could set off a long-term reversal, possibly dragging EUR/CAD further south to S2 (1.4670) or all the way down to S3 (1.4450).
Don’t forget that the Bank of Canada (BOC) has its interest rate decision lined up this week, which means that Loonie pairs could be in for extra volatility.
Whichever way you decide to play this setup, be sure to practice proper risk management and check out our newly launched forex correlation tool!