Several days ago, I had an analysis that suggested the 1.3750 region was going to be important in the EUR/CAD pair. Since then, we rallied from that level and then came back to test it again on Tuesday. Wednesday morning saw this market drift a little bit lower, and then bounce significantly. I am more convinced now in the validity of the support that I was just a couple of weeks ago.
You can clearly see that the 1.3750 level was in fact resistance going all the way back to at least March. On this chart, I also have the 100 day exponential moving average, which longer-term traders do tend to pay attention to. I also have a Fibonacci retracement tool drawn on top of the chart, and the 38.2% Fibonacci retracement level is right at the same region. In other words, I can give you a lot of reasons why this area should continue to be important.
Oil
Keep in mind that the Canadian dollar is of course a proxy for oil and that particular commodity is going sideways at the moment. This pair does tend to move inversely from oil, but there’s a lot of different things that can move this market as well. So don’t get stuck just on oil, but do recognize that if oil prices fall, this pair almost instinctively will go higher because of course it takes less currency to buy that commodity, and of course the Euro won’t be any different.
I think that this market will probably bounce a little further, aiming for the 1.40 level, and possibly even as high as the 1.4150 region. I don’t know if I’m ready to say that we are going to break out to the upside yet, but it certainly looks like we’re trying to build up the momentum needed to do so. With that, I am essentially “buy only” in this market as long as we can stay above the 1.3750 region. Short-term charts that show pullbacks could be used for entries.
