EUR/CAD Daily Outlook- Sept. 1, 2014

The EUR/CAD pair fell initially during the session on Friday, but found enough support near the 1.4250 level in order to bounce and form a hammer for the second day in a row. Because of this, we could see a little bit more of a bit of bullish pressure, but considering that we broke down below a significant trend line a couple of weeks ago, I believe that the market will more than likely try to go higher and retest the 1.45 level for resistance. A bounce at this point in time is not a buying opportunity as far as I’m concerned, is simply a suggestion that we could sell from higher levels.

The 1.45 level was significantly supportive in the past, and as a result I suspect that it will be resistive now. Breaking below the trend line makes me very bearish of this pair in general though, and I do believe that we will make fresh lows sooner or later. It might take some time, but ultimately there’s no way I can buy this pair, and feel much more comfortable shorting it as it goes with what I believe is the new trend.

Europe is in trouble, and this is “Europe versus North America.”

This market can be thought of as a “Europe versus North America” type of situation. After all, the European economy is struggling in a big way, and there is possibility of ECB monetary policy being loosened. On the other hand, the Canadian economy while not doing quite a strong as the United States, it is highly interconnected with the Americans, so therefore it’s only a matter of time before the strength in the US economy wears off on the Canadians. With that, the market will recognize that the Canadian economy stands to gain while the European economy is going to continue to struggle for the next several months. Ultimately, I think that this market goes down to the 1.40 level, but only after a bounce happening first. It is not until we break back above the previous uptrend line that we would consider going long.

EURCAD 9114

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.