EUR/CAD Extending a Bearish Continuation Breakout

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EUR/CAD Extending a Bearish Continuation Breakout

EUR/CAD has been consolidating since making a low on the year around 1.3380 in the middle of March. After a rebound from 1.3381, the pair rallied to about 1.3750, which became resistance over and over again throughout the rest of March and into April.

EUR/CAD 4H Chart 4/8
eurcad 4h chart 4/8
(click to enlarge)

Here are some observations from the 4H chart.
1) Price is falling below a rising triangle pattern, signaling bearish continuation.
2) EUR/CAD held below its 200-period simple moving average (SMA), which represents maintenance of the medium-term bearish bias. Also, price has slid back under the 100-, and 50-period SMAs reviving short-term bearish bias as well.
3)The RSI has fallen below 40, which shows loss of bullish momentum. It is now tagging below 30, showing initiation of the bearish momentum.

The technical picture in 4H chart suggests EUR/CAD is going to test the 1.3380 support area soon with risk of extending lower.

The bearish picture in the 4H chart is aligned with the bearish mode seen in the daily chart below.

EUR/CAD Daily Chart 4/8
eurcad daily chart 4/8
(click to enlarge)

Here are some observations from the daily chart:
1) The moving averages are in bearish alignment and price continues to hold under them.
2) The consolidation found resistance at the previous support pivot around 1.3750-1.3760, which shows that bears are in control of the market.
3) The RSI has held below 60 after tagging below 30 in March. This reflects maintenance of the prevailing bearish momentum.

The technical picture in the daily chart also suggests bearish continuation. Even if price pops up above 1.3760, EUR/CAD would be in a bearish mode in the medium-term, allowing for some bullish correction in the short-term. In this scenario, we should look for resistance around 1.40

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.