EUR-CAD Uptrend is Tested

By: Mike Kulej

The last couple of weeks brought a selloff in the EUR-CAD. Nothing surprising. After all, this pair has been in an uptrend for a few months and has registered strong gains. The latest up swing alone spanned almost 1300 pips, from 1.3065 to 1.4345, a large move.

From that point, the EUR-CAD fell to the current level of below 1.3800, suggesting that maybe the uptrend came to an end. Most likely, not yet. Based on the market technicals, this pull back looks like a correction within the uptrend. The price is still above the main trendline and the 100 SMA, so the trend is not broken yet. In addition, the EUR-CAD is approaching a combination of supports. One is provided by the 50% Fibonacci retracement level and the other by a previous high from July. They both converge at roughly 1.3700. If the price forms a candlestick bullish reversal pattern, chances are that the uptrend will resume.

The Stochastic indicator is very oversold, which supports the possibility of the EUR-CAD changing direction soon. However, as noted above, the price itself must confirm it first with a bullish candlestick formation.


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