New Year may ring in more EURCAD weakness
The EURCAD rally in the early part of December, driven in part by plunging oil prices, ended with the move below 1.4520. The past two weeks have seen EURCAD languish between the 61.8 and the 76.4% Fibonacci retracement levels of the December’s 1.3960-1.4640 range. A move below the 76.4% level suggests that a 100% retracement is likely. The December downtrend from the 1.4640 peak remains intact while trading below 1.4190.
Management and risk description
There are already a large number of EURCAD short positions that could act as a drag on additional gains. Oil prices could fall through support at $50.00/bbl, putting downward pressure on the Canadian dollar and putting the stop-loss in play. Trading in the new year may start off slow, failing to provide the impetus to drive EURCAD below the 76.4% Fibonacci support level.
Entry: Sell ½ position of EURCAD at market (Currently 1.4130). Balance at 1.4180.
Time horizon: 2 weeks.
Chart: EURCAD 30 minute with Fibonacci retracement shown
Chart: EURCAD 1 hour with downtrend and stop loss noted
Chart: EURCAD 4-hour with break of short term uptrend
Chart: EURCAD 5-year daily with moving averages
-- Edited by Kevin McIndoe
— Edited by
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