EUR/CAD Tries to Rally but Fails - 30 October 2015

Christopher Lewis

Looking at the EUR/CAD pair, you can see that we tried to rally during the course of the session on Thursday, but struggled at the 1.45 level which of course is a large, round, psychologically significant number. The fact that we fell and formed a shooting star tells me that this pair is not ready to continue to try to fight higher. I think that a break down below the bottom of the range sends this market looking for the 1.4250 level which of course is marked by the red horizontal line on the chart. This is an area that offered quite a bit of support in the past, as well as resistance so it will of course attract traders in general.

On this chart, the 50 day exponential moving average has been crossed significantly and has even offered resistance just a couple of sessions ago. With this, I believe that we are now heading into a downtrend, as the Euro will continue to soften in general due to the recent statements by the European Central Bank.

Oil prices

Oil prices can have an effect on the Canadian dollar, and as a result if oil goes higher, it makes sense if this pair falls. However, there are more reasons to short this market then just whether or not oil can continue to go higher. Quite frankly, this is a bit of a “Europe versus North America” currency play, as the Canadians are attached to the Americans, which seem to be doing better than the Europeans at the moment. It’s a bit of a “knock on effect”, if you will. With that, I believe that this pair does in fact continue to grind down towards the 1.4250 level, and then quite frankly break down below there and head to the 1.40 level given enough time. If we broke above the top of the shooting star for the session on Thursday, we will more than likely try to reach towards the 50 day exponential moving average, where we will turn back around and start falling again.

EURCAD

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.

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