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I’m looking at this simple trend setup on the short-term time frame of EUR/CAD. Do you think resistance might still hold?

Short EUR/CAD Idea

This pair formed lower highs and lower lows inside a descending channel on its 1-hour time frame, and price looks ready for a test of resistance again.

Applying the Fib tool on the latest swing high and low shows that the 61.8% level lines up with the resistance close to the 1.4800 major psychological mark. However, price already seems to be hitting a ceiling at the 38.2% Fib around the mid-channel area of interest.

EUR/CAD 1-hour Forex Chart
EUR/CAD 1-hour Forex Chart

Stochastic is already indicating overbought conditions or exhaustion among buyers, so turning south could mean that sellers are taking over.

I’m considering hopping in at market with a small position ahead of the release of the euro zone PMIs, which are expected to dip further. If the actual readings even come in below consensus, ECB easing expectations could pick up and spur a sharp drop fro the shared currency.

Then again, Canada still has its manufacturing sales report due today and this is expected to show a 1.8% decline for June, erasing the earlier 1.6% increase. If so, the pair might be able to make it to the very top of the channel, which would be a much better entry price.

I’m keeping a close watch on the 1.4800 area to see if I can jump in if it holds. I’ll set a tight stop around 1.4850 and aim for new lows around the channel support.

What do you guys think?

Happy

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