EUR/CAD Continues to Drift Lower on Wednesday - 26 November 2015

Christopher Lewis

I don’t normally trade this pair very often, but I have to admit it’s been quite good to me recently. As you are aware, I have been shorting this market and although it hasn’t exactly been a massive move lower, it has been a nice gradual drift. We had broken down below and uptrend line several weeks ago, and then for me what was the no-brainer part of the trade was when we got the impulsive red candle after trying to break back above the uptrend line. This was essentially a confirmation of a trend change, as we reach all the way down to the 1.45 handle. After that, we broke below the 200 day exponential moving average, and that now becomes a longer-term downtrend by most people’s standards.

Continued Softness

I believe that the market continues to soften from here, and we could roll over a bit during the session on Wednesday. We should find a little bit of support at the 1.40 level based upon the large, round, psychological significance of the number, but I believe the real support will be all the way down at the 100% Fibonacci retracement level which is quite often what we find ourselves reaching towards after a break of the 61.8 Fibonacci retracement level as we have done recently. That sends this market looking for the 1.35 handle.

I think that there is a bit of a support “zone” between the 1.35 level and the 1.34 level below it, so it’s only a matter time before we could get a bounce from there as well but nonetheless I believe this is a market that should provide a nice longer-term move to the downside. Quite frankly, the Canadian dollar has no support from the oil market, so this shows just how soft the Euro is overall. Ultimately, I believe that every time this market rallies, short-term sellers will step in and start selling again. Longer-term traders will simply hang onto the short position.

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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