EURCAD On the Cusp of a Big Slide Near Multi-Year Resistance Level
Cory Mitchell, CMT
Post-2010, 1.60 is a level rarely reached in the EURCAD, and when it has been reached, it was followed by aggressive selloffs.
On July 31 that level was tested again, reaching as high as 1.5980 (rounded). There was a sharp sell-off once again. For the last several days the price is consolidating above 1.5680. A drop below could lead to a further decline. The next major support is 1.51.
Since 2012, the EUR has been putting in higher swing lows, so the EURCAD has been strengthening despite the inability to hold above the 1.60 level. Over the longer-term, there is a still a rising support area at 1.51 and below if the price does decline.
If the price breaks above 1.60 and is able to hold there, that would also be a tradeable event based on the trading-the-trend-after-a-breakout method.
As for taking a long (based on the daily chart) I will be waiting for a lower price, or a break above 1.60 which can sustain itself, consolidate, and then break higher again.
The short trade has more likelihood of developing.
A drop below 1.5680 has the potential to trigger further selling. Consider taking a partial position there. Possibly 1/4 of a typical position. The price is likely to have a retracement back to the upside, retesting 1.2826 (Aug. 7 swing high) or even 1.60. This is where I will be watching and looking to take larger positions.
I would then be looking to exit near 1.52, above the next support level.
The initial small position is in case of a steep decline.
A pullback to the upside that gets rejected (or a false breakout), would help further confirm a potential short-term top here, and would provide a better price as well.
Check out the Trading Based on Price Action video for clues on what to look for.
By Cory Mitchell, CMT
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.