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Since the Brexit also puts the euro at risk, I’ve got my one eye on this long-term reversal pattern on EUR/CAD then I’m zooming into the 1-hour time frame for a potential entry.

As you can see from the pair’s daily time frame below, a head and shoulders pattern appears to be forming, which means that price has a lot of room to move south.

EUR/CAD Daily Forex Chart
EUR/CAD Daily Forex Chart

Price hasn’t broken below the neckline, though, so it’s too early to say that it’s in for a drop of more than two thousand pips or the same height as the chart formation.

Still, I’m bearish on this pair mostly because of the post-Brexit uncertainty in the eurozone and also the oil strike in Nigeria that might dampen supply and push prices up.

Here’s a closer look at that descending channel I’ve marked:

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

Price action is still a bit of a mess after that EU referendum volatility but it looks like the descending channel stayed intact. I’m looking to short on a pullback to the top of the channel around the 1.4450 minor psychological mark or on a break below the channel support below 1.4250.

Depending on where I’m able to short, I’m looking to place a wide 400-pip stop, which is around the pair’s weekly ATR. If EUR/CAD breaks below the neckline around 1.4000-1.4100, I’ll add to my short position.

As always, don’t risk more than 1% of your account on a single trade, and make sure you read our risk disclosure if you’re thinking of taking the same setups!

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.