I’ve been waiting for a chance to hop in this long-term selloff on EUR/CAD, and it looks like this correction could be it! Here’s where I’m looking to short.
Short EUR/CAD Idea
This pair has been cruising inside a descending channel since the middle of last year and has just bounced off support. Price has pulled up to the mid-channel area of interest, which is close to the 38.2% Fibonacci retracement level.Stochastic is still pointing up, which suggests that a larger correction might be in the works. The 61.8% level looks like a prime spot to short as it coincides with an area of interest and is also near the top of the channel at the 1.4550 minor psychological mark.
This area is also near the 100 SMA dynamic inflection point, which is below the 200 SMA to confirm that bearish momentum is still in play.
There’s not much in the way of top-tier releases from Canada this week, so I’m looking ahead to the BOC monetary policy decision lined up for next week.No actual policy changes are expected, but central bank officials are likely to highlight the recent improvements in the Canadian economy. After all, employment data has turned out much stronger than expected in back-to-back months.
There are also no major reports due from the euro zone this week, so the shared currency could take its cues from overall sentiment and counter currency action.Here’s my plan:
Short EUR/CAD at 1.4525, stop loss at 1.4725 based on the pair’s average daily volatility, and profit target at the channel support of 1.4225.
What do you guys think?
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