EUR/CAD Daily Outlook- June 24, 2014

The EUR/CAD pair fell during the session initially on Monday, but found enough support to turn things back around and form a pretty good looking hammer. The hammer of course suggests that the buyers are starting to step into the marketplace, but don’t be fooled: this market is without a doubt very bearish, and should only remain so over the longer term.

This chart could be a buying opportunity for those of you who are short-term traders, but when I like to think about when I see a chart like this is that it is telling me I can buy Canadian dollars “on the cheap.” What I mean by this is that we will more than likely get some type of bounce from here, but at the first signs of weakness I have to be willing to sell this market.

Downtrend should continue, especially if the oil market is to be believed.

The oil markets continue to impress, although we did have a slightly negative session during the day on Monday. Markets in that region of the world are pulling back a little bit, and that might be the catalyst to push this market higher. However, the 20 day exponential moving average has been dynamic support and resistance in a fairly reliable manner over the last several months, and it happens to line up nicely with the 1.4750 region, an area that I see a lot of clustering and therefore sell orders. This should be an area of that the buyers really struggle to push the market above.

With that in mind, I think simply sitting on the sidelines and waiting for the opportunity to sell this market at a higher level is probably the best way to go right now. Normally, I would not hesitate to sell a break of the bottom of the hammer if we fall again during the session on Tuesday, but since we are so close to the 1.45 handle, I would probably forgo selling this market without a bit of a bounce first.

EURCAD Daily 62414

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.