EURCAD At Key Level and Consolidating, Awaiting Breakout
Cory Mitchell, CMT
The EURCAD is consolidating on the hourly chart near the top of a large range (or an inverse head and shoulders pattern). The larger pattern extends from the 1.58 down to 1.53 (rounded). The price is consolidating between 1.58 and 1.57 (rounded), near the top of the large range.
Whether the price breaks higher or lower from this 100 pip (rounded) consolidation, there is room for it to move.
An upside breakout indicates the longer-term uptrend is continuing. A short-term target is 1.5925, with longer-term targets at 1.61 and 1.63. While targets can be placed to lock in some profit, I am actively using trailing stop losses (try Renko charts for a trailing stop loss). The trailing stop loss helps prevent giving back all the profit if the price reverses before hitting a target.
A downside breakout of the consolidation indicates the range (or inverse head and shoulders) is continuing. The first target is 1.55 or just below. The next target is 1.5350, near the pattern lows.
Stop losses typically go just outside the opposite side of the consolidation from the breakout. A lower timeframe breakout (15- or 5-minute chart) can be used to reduce stop loss size.
For more on how to navigate these profitable forex markets, read How to Trade Forex in Volatile Conditions.
By Cory Mitchell, CMT. Join me in my free Facebook swing trading group.
Disclaimer: Nothing in this article is personal investment advice, or advice to buy or sell anything. Trading is risky and can result in substantial losses, even more than deposited if using leverage.