Trade Idea: EUR/CAD Double Top

Crude oil prices have been on a tear these days so I’ve got a long Loonie bias. Here’s a simple reversal setup I’ve spotted on EUR/CAD’s 1-hour time frame.

As you can see from the chart below, price formed a double top after failing in its last two attempts to break above the 1.4750 minor psychological mark. The pair just broke below the neckline around 1.4550 when the BOC decided to keep interest rates unchanged and give a somewhat neutral statement.

EUR/CAD 1-hour Forex Chart

EUR/CAD 1-hour Forex Chart

Zooming out to the longer-term time frames reveals that this reversal pattern is right around the longer-term descending trend line resistance and an area of interest, so a break lower could signal additional bearish momentum. With this short position, I’m aiming for the recent lows around the 1.4200 handle.

EUR/CAD 4-hour Forex Chart

EUR/CAD 4-hour Forex Chart

I’ve decided to set my stop past the tops, trend line, and the 1.4800 major psychological handle to give me room to cut losses if price action goes against my trade. There are no reports due from both the euro zone and Canada for the rest of the week so I’m thinking the ongoing trend could carry on. Here’s what I got:

Short EUR/CAD at market (1.4550), stop loss at 1.4825, profit target at 1.4225 for a potential 1.2-to-1 R:R. I’ve risked only 0.25% of my account on this trade since I’ve already got another trade open this week. Make sure you read our risk disclosure if you’re joining me!

Cheers,

Happy time

Other Popular Articles:   

Comdoll Trading Kit Forex Trade IdeaWhat is the STA strategy?Q4 2015 in Review

  • Jonathan

    Hello Happy,
    I’m also entered in this pair, at 1.4575. I’m in it for a different setup but your ideas look good as well, especially with no big news and a current bias.
    I trade harmonic price patterns, and this is a nice developing bullish bat, with a BAMM entry at break/retest of B point (1.45750 at 38.2 Fib from CD, “recent trend”). BAMM completion in PRZ around 1.42400, near your P/T. I would then hope for a nice bullish move as you have a completion of a Bullish Bat, with 3 harmonic numbers in a tight PRZ.
    But you never know on the current bearish trend, and I’m ready to exit if reversal signs occur with corresponding fib levels.
    Best of luck!, if you got any further ideas on after entry techniques, let me know. Thanks Happy, Cheers
    Jonathan

    • Thanks for sharing your thoughts! I’m eyeing the same profit target as you are. Any other comdoll setups you’re looking at with those harmonic patterns?

  • Jonathan

    Thanks for your response Happy. I am looking at Gbp/Aud (1Hr), with a bullish impulse wave completion at 1.9680. Hopefully that leads to a Bear 5/0 pattern completion at 2.0105, or somewhat close. I would also assume that the AB=CD completion is around there as well, but the bull impulse wave needs to complete first. Of course, all the plans can fall apart anytime 🙂
    How did your Eur/Cad play out. I took half position at 1.4495, and S/L was hit at 1.4545 to cover the rest of the position.
    Take care, Happy Trading

    • Hi Jonathan! GBPAUD is looking pretty choppy (What was up with that spike yesterday, anyway?) but it’s downtrend is looking really strong. So far I’ve still got my EURCAD position open and banking on climbing oil prices. I’ll have an update posted in a bit. See you around!

  • Pingback: Trade Updates: Long AUD/CAD and Short EUR/CAD()

  • Pingback: Trade Review: EUR/CAD Double Top()