We’ve got big volatility to start the new week, and this clean technical setup on EUR/CAD is one to watch for swing trade in the making.
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Fresh Market Headlines & Economic Data:
Upcoming Potential Catalysts on the Economic Calendar
Fed Mester speech at 6:30 pm GMT
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Australia Business confidence at 12:30 am GMT (Nov. 10)
China Inflation rate at 1:30 am GMT (Nov. 10)
Japan Eco Watchers Survey at 5:00 am GMT (Nov. 10)
What to Watch: EUR/CAD
On the one hour chart of EUR/CAD above, we can see a strong technical that could draw in more sellers in the days ahead. Over the past few session, the pair formed a rising wedge, which was easily broken in today’s session on traders moving bigtime towards risk assets after positive COVID-19 vaccine news.
This was especially beneficial to oil prices, up over 9.0% on the session as traders speculate oil demand could make a comeback on a rebound in the travel, hospitability, and entertainment industries. And when oil benefits, that tends to be a good thing for the Canadian dollar.
So, we’ve got a strong technical break of not only the wedge pattern, but also strong support around the 1.5370 area, which could draw in more traders into what was already a slow downtrending market through October.
And with no major catalysts for the rest of the session, a setup to watch out for if themes and catalysts remain supportive of risk-on sentiment is a retest of the broken support area and bearish reversal candles.
In that scenario, a short play makes sense for both short-term and medium-term time frames, maybe even longer-term time frames given the likely weakness we’ll see in Europe as it locks down once again to combat the pandemic.