Even though EUR/CAD broke below that short-term ascending trend line I was watching, it seems to be forming a bullish continuation pattern right now. Because of that, I decided to make a couple of adjustments. If you’re wondering what I’m talking about, make sure you read my initial idea first.
I may have been a wee bit impatient in hopping in at market when price dipped to that 1-hour trend line as the pair eventually broke below it. However, I don’t think it could pull back as low as my second entry near 1.4200 at this point since EUR/CAD is forming a triangle consolidation pattern.
With that, I’ve decided to cancel my pullback order and wait for a chance to add to my small position on an upside breakout instead. I’ve also adjusted my stop higher to 1.4275 to be out of the trade in case the pair makes a sharp break below the triangle support.
Stochastic seems to be pointing up to show that euro bulls are about to charge again. Besides, the French presidential election debates just ended and the polls are giving the victory to Macron while Le Pen is lagging far behind. This eases fears of a “Frexit” and anti-euro sentiment in the region.
As for the Loonie, I think there’s bound to be more downside pressure on crude oil even after last week’s batch of U.S. inventory data showed a slight drop in stockpiles. U.S. oil rig counts continue to rise but global demand could slow now that the Fed hiked borrowing costs, thereby dampening spending and investing activity. There has also been some buzz about possibly extending the OPEC output deal until the end of this year, which suggests that their current round of production cuts might not be enough to keep oil prices afloat.
Consolidation for EUR/CAD could go on for a while until the next batch of reports from both the euro zone and Canada come up on Friday. The former has industry PMI readings from its top economies while the latter has its CPI reports due. I’ll be keeping tabs on election headlines and oil updates as well to see if I need to make more adjustments or close early.
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.
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