The EUR/CAD pair went back and forth during the course of the session on Thursday, bouncing around just below the 1.4750 level. The 1.4750 level was once supportive, but it should now be resistive. With that being the case, the market will more than likely continue to find sellers in that particular region. On top of that, you have to keep in mind that we have broken down below the uptrend line that the market had relied on for so long. That can be the first sign that the trend is changing.
The 50 day exponential moving average is marked on this chart, and you can see it offered resistance again for the fourth session in a row. With that being the case, I think that the sellers are starting to take control, but having said that it is going to take a significant amount of momentum in either direction to make a move out of this tight range right now.
While the USD/CAD is normally the first market people think of when we are speaking of oil, the truth of the matter is that the US dollar isn’t as vulnerable as the Euro is, as the Americans are starting to provide much of their own energy now. With that being the case, the Europeans unfortunately don’t have the same advantage that the Americans do, so this pair will be especially sensitive to the oil markets going higher.
Having said that, if we can break down below the bottom of the Wednesday hammer, it would be a very negative sign and we should continue to go lower from there. It is not going to be easy to hang onto the trade though, because any time we are in the middle of a trend change, it gets a very nasty. On the other hand though, if we break back above the uptrend line, the market will then try to reach towards the 1.51 handle.