A Bearish EUR/CAD to Test 1.400 Major Support

A Bearish EUR/CAD to Test 1.400 Major Support

By: Darryl Frankfort | Where To Trade | On:13-10-2014 15:31
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Key Highlights

  • EURCAD on a Down trend since March 2014
  • Trending in a downward channel
  • Price rejection at major support
  • Technical indicators
  • Suggested Trading approach

 

EUR/CAD

The EURCAD has been on a down trend since March of this year. The down trend has fallen into a neat channel clearly visible from the daily chart. From the peaks on February at 1.55 we have fallen over 1500 pips and we are now approaching the 1.400 level.

The exchange rate has found rejection near the 1.400 level and has retraced over 300 pips up. Price has attempted to get past the major level on three different days, 4th of September, 19 of September and recently on the 2nd of October with each time finding significant Buying pressure that manages to overcome the bears. Beyond the 1.400 level the next significant support is at 1.3700 300 pips below.

Where To Trade - EUR/CAD Daily - 13-10-2014

 

Technical indicators

Monthly Chart

From the monthly chart, the 14 period moving average has just made a bearish cross and is now trading above the candle sticks. This is a bearish signal that the bearish momentum has picked up in the longer term. It is also a definite indicator that the previous uptrend has ceased. We can therefore confidently anticipate that the prices will slide lower.  

The stochastic is currently reading 10.69 which indicates that we are at oversold territory. We should thus anticipate some temporary reversal in the exchange price. The RSI on the other hand is giving a very neutral reading at 50.3. This is an indication that the current trend is likely to continue.

Where To Trade - EUR/CAD Monthly  13-10-2014

 

Weekly Chart

From the weekly Chart, the 14 period moving averages is acting as a dependable resistance for the prices, currently this moving average is trading above the prices of the candle sticks. This is a bearish sign. It indicates that the current downward momentum is strong and likely to continue in the medium term view as well.

The stochastic at 32.5 is currently moving out of the oversold territory. This indicates that we should be anticipating the current buying pressures to ease and the bears to resume dominating. The RSI is giving a neutral reading at 41.95. This is a trend continuation signal indicating that the current downtrend is likely to continue.

Where To Trade -  EUR/CAD Weekly - 13-10-2014

 

Daily Chart

From the daily chart, the 14 period moving period has touched the candle sticks and is attempting to make a bullish cross. This is a warning that in the medium term, we may get some significant bullish pressures. Checking the reliability of this indicator on this timeframe however, we can see that it has given many false bullish signals; we will therefore need to get more confirmation before acting on this signal.

The Stochastic at 70.10 has just moved out of the overbought conditions. This is a bearish signal indicating that the larger down trend is ready to continue. The RSI is giving a neutral reading at 50.02 which we can take as a trend continuation signal. We can thus anticipate that the prices will be bearish in the short term.

Where To Trade - EUR/CAD Daily - 13-10-2014

 

Wrap up

The EURCAD has strong bearish momentum, we therefore anticipate that the prices will touch the 1.400 Level in the medium term and move beyond it, in the long term, up to the 1.3700 Level. Under these conditions a good long term trading approach is to short the pair below the 1.400 Level after it has been retested and take profits just above the1.3700 level.

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