Short term
Trade view / 11 July 2016 at 13:10 GMT

Respecting the range in EURCAD

FX Trade Strategist / www.Loonieviews.net
Canada
Instrument: EURCAD
Price target:
Market price:
Background

EURCAD has been locked in a 1.4280-1.4560 range for the past two weeks. In addition, the EURCAD decline since April remains intact below 1.4570 on the daily chart. This area is being guarded by a minor downtrend line from mid-June at 1.4460 and a triple top at 1.4465.
 

EURCAD is likely to remain on the defensive due to ongoing Italian banking woes, sluggish economic growth and Brexit concerns while modestly improving US economic growth and a neutral Bank of Canada should provide some support to the Canadian dollar.

Friday’s nonfarm payrolls report had a bigger impact on oil and the Canadian dollar than it did on EURUSD. As the impact from the NFP report fades, EURCAD should retrace some of its gains.

The EURCAD range remains intact and the top side is reinforced by a triple top which suggests that another visit to the bottom of the band is likely.

Management and risk description 

This is a risky trade. The stop will get triggered if WTI oil prices continue to fall. The stop loss will also be blown if Wednesday’s Bank of Canada interest rate statement, press conference and Monetary Policy Report are seen as dovish.

Trade idea parameters

Sell 1/3 position of EURCAD  at market (1.4440) 1/3 position at 1.4480, 1/3 position at 1.4540.

Stop: 1.4580.

Target: 1.4280.

Time horizon: 5 days.

EURCAD 1-hour with trading band and stop loss shown
eurcad
Source: Saxo Bank 

EURCAD 4-hour showing dual downtrends
eurcad
Source: Saxo Bank

EURCAD 5-year daily with moving averages
eurcad
Source: Saxo Bank


— Edited by  Martin O'Rourke

Non-independent investment research disclaimer applies. Read more
11 July
assi assi
hellow mike, what about EURJPY...?
11 July
assi assi
Sorry Mike
11 July
Estuardorlemus Estuardorlemus
Hi Mike, do you think that weak data , like non-commodity export falling and weaker than expected consumption should take BoC to a more dovish tone and trigger the stop? What is your position on the BoC ? . Regards
11 July
Michael O'Neill Michael O'Neill
I think that the boC will be on the doveish side. I also think that is the consensus so it shouldn't be a big deal.
11 July
Michael O'Neill Michael O'Neill
Hi Assi: sorry for the tardy response. I think CADJPY will rebound on Japan stimulus but it is a countrend idea.
11 July
Estuardorlemus Estuardorlemus
Thanks.

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