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Featured Trade EURCAD potential bearish breakdown from 7month support

Article By: ,  Financial Analyst
May 22, 2019 6:28 AM

Short-term technical outlook on EUR/CAD (Wed, 22 May)



click to enlarge charts

Key elements

  • Since hitting a high of 1.5181 on 09 May 2019, the EUR/CAD cross pair has evolved into minor downtrend phase and broke below a medium-term/1-month ascending range support from 02 Apr 2019 low on 20 May 2019.
  • Right now, it is testing a major/7-month ascending range trendline in place since 03 Oct 2018 swing low now acting as a support at 1.4945.
  • Momentum remains negative as the daily RSI oscillator has not flashed any bullish divergence signal and still has room to manoeuvre to the downside before it reaches an extreme oversold level at 22. In addition, the shorter-term hourly RSI oscillator remains below a corresponding resistance at the 55 level.
  • The key short-term resistance to watch stands at 1.5000 which is defined by the pull-back of the former ascending range support from 02 Apr 2019 low and the 23.6% Fibonacci retracement of the entire down move from 09 May 2019 high to 21 May 2019 low.
  • The next significant near-term supports rest at 1.4900 and 1.4870 (1.236 Fibonacci expansion from 09 May 2019 high).

Key Levels (1 to 3 days)

Intermediate resistance: 1.4970

Pivot (key resistance): 1.5000

Support: 1.4945, 1.4900 & 1.4870

Next resistances: 1.5100 & 1.5150

Conclusion

If the 1.5000 key short-term pivotal resistance is not surpassed and a break below 1.4945 is likely to trigger a bearish breakdown from its 7-month ascending range support for a further potential downleg to target 1.4900 and 1.4870 next.

On the other hand, a break with an hourly close above 1.5000 negates the bearish tone for squeeze up towards the next intermediate resistance at 1.5100 and even 1.5150 (the range top in place since 16 Apr 2019).

Charts are from eSignal


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