Trade Update: EUR/CAD Double Top

EUR/CAD doesn’t seem to be going anywhere anytime soon, but I’ve still got a bearish bias on this pair. Think I should hold or fold?

Before reading on, make sure you review my initial trade idea and fundamental arguments for shorting this one. It looks like the downtrend setup is still valid and additional resistance levels are located around the falling trend line and short-term descending channel, as I’ve indicated in the 4-hour chart below.

EUR/CAD 4-hour Forex Chart

EUR/CAD 4-hour Forex Chart

Besides, the looming EU referendum is also weighing on the euro as the entire European region could be vulnerable in the event of a Brexit. So far, opinion polls showing a lead in favor of a Brexit have triggered a bearish reaction from the shared currency. On the other hand, the Loonie has been able to benefit from rallies in oil prices but appears to have gotten dragged lower by BOC Governor Poloz’s recent testimony.

According to the central bank head, they aren’t planning on hiking interest rates anytime soon, which isn’t really much of a surprise given how the Canadian economy is still trying to get back on its feet after the oil industry slump. With that, I’m thinking that the Loonie’s reaction would just be short-lived and that this pair could be more sensitive to Brexit jitters in the next few days.

I’ll keep this trade open for now since I’m able to benefit from its positive carry anyway. I’ll see how price reacts to the 1.4600 area before making additional adjustments. Stay tuned to my updates through my Twitter account and don’t forget to read our risk disclosure!

Cheers,

Happy time

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