EUR/CAD is developing a bearish outlook. We will get to the overall picture later, but first let’s examine the current consolidation range formed from the end of last week into the first session of this week.
As we wind down a quiet Memorial Day session, the EUR/CAD found resistance at 1.3525 again. The 1H chart shows a range between 1.3475 and 1.3525. A break below the middle of this range at 1.35 would likely put pressure on the 1.3475 support pivot and threaten bearish continuation. Even if there is a bullish break, we should limit the outlook to the 1.3575/1.3580 area. Now to the downside, we should first limit the bearish outlook to 1.34 as we will see why in the 4H chart.
In the 4H chart, we can see that the bearish mode in the 1H chart is within a bullish trend developing in the 4H chart. Note that price is still trading above the 200-period SMA and above a rising trendline from the 1.3023 low. Now, it does look like the rally is sputtering as price appears to be flattening out. If price does reach down to 1.34, we would be looking at a bullish-neutral market. Price would still maintain a slight bullish bias above 1.34, because it would hold above the 200-period SMA and a rising trendline. A brak above 1.36 would then open up a bullish outlook towards the 1.38-1.3805 high.
Now, if price falls below the 1.34 area, THEN, we can start discussing the bearish outlook. Therefore, in the current mode, we should limit the bearish outlook to 1.34.
We noted a bearish outlook in the 1H chart and a bearish mode in the 4H chart. The daily chart shows a bearish market with a potential price bottom forming IF price can hold above 1.34 – another reason to monitor 1.34. But below 1.34, the 1.3023 low down to the .30 handle would be in play.
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