EUR/CAD has been cruising with its higher lows and higher highs inside an ascending channel on its 4-hour time frame.
Is it about to find support at these retracement levels?
Let’s take a look at these nearby inflection points!
The euro had a pretty solid run earlier this month, buoyed by improving economic data and relatively neutral ECB rhetoric downplaying the odds of aggressive easing.
On the flip side, the Canadian dollar has been bogged down by weakening crude oil prices and a lack of progress in U.S.-Canada trade talks.
However, EUR/CAD retreated from its rally after testing its ascending channel top around the 1.6200 mark. Can the trend still return after this correction?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the Canadian dollar and the euro, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
The pair is already testing the 38.2% Fibonacci retracement level that lines up with the mid-channel area of interest near S1 (1.6030). A larger correction could still dip to the 50% Fib closer to the 1.6000 major psychological mark or the 61.8% level near 1.5950.
Keep your eyes peeled for reversal candlesticks at any of these levels, as a bounce could take EUR/CAD back up to bullish targets at the swing high or to the channel top closer to R1 (1.6260).
On the other hand, a sustained selloff below the Fib levels and channel bottom near S4 (1.5920) could pave the way for a drop to the swing low at 1.5767 or lower.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment.
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
