The EURCAD has rallied strongly and broke out above its resistance-turned-support level as visible in this D1 chart. This currency pair has now formed a bump-and-run reversal pattern and we expect the EURCAD to correct back down to its new support level which is also enforced by its ascending support level.
MACD shows a gap between the histogram as well as the moving average and we expect the gap to close and the histogram to start trading below its moving average as the correction unfolds. RSI is trading in extreme overbought territory and a breakdown should initiate the sell-off.
We recommend a short position at 1.4400 which would be an addition to our previous short position which we took on October 22nd at 1.4100. We currently do not recommend a stop buy order and will remain in this trade without a hedge.
Traders who wish to exit this currency pair with a loss are advised to place their stop loss order at 1.4550. We will not use a stop loss order and execute this trade as recommended. Place your take profit target at 1.4100.
Here are the reasons why we call the EURCAD currency pair lower
- The EURCAD currency pair formed a bump-and-run reversal pattern which is a bearish chart formation and we expect it to retest support levels
- MACD shows a gap between the histogram as well as moving average which we expect will be closed
- RSI is trading in extreme overbought territory and a breakdown should initiate the correction
- Profit taking after a strong rally in order to realize trading profits
- New short positions by institutional swing traders
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