Similar to my EUR/AUD idea, here’s a bullish euro setup that’s getting a little bit of a kicker from recent oil sentiment and Canadian data.
EUR/CAD Trade Setup
EUR/CAD bulls were also beneficiaries from the reaction to the first round of the French elections this past weekend, gapping higher at the week’s open with barely a pullback before rocketing higher further. Price action has stalled since Tuesday, which possibly could lead to a pullback in the near future.
Friday’s economic calendar looks busy for both the euro and Loonie, most notably inflation data from Europe and the monthly GDP number from Canada, and if that leads to a pullback down to the 1.4600, I’ll look to enter long there. With positive sentiment for the euro still high, weak data from Canada recently, and oil prices making new relative lows, I think this short-term trend higher has legs, especially if Canada’s monthly GDP disappoints.
I’ll limit my risk by going with a small position size and a two times daily ATR stop, and my target will be the next major psychological level area, giving me a nice potential reward-to-risk ratio. Here’s what I’m doing:
Long half position EUR/CAD at 1.4600, max stop loss at 1.4375, max target at 1.5050 for a potential 2:1 return-on-risk.
I’m risking only 0.5% of my account on this position and I’ll look to re-assess to potentially reduce my risk and maximize my gain if triggered and the market makes it up to the next potential resistance with strong momentum.
If there is no pullback and it turns out to be a bullish pennant breakout as Big Pippin suggested today, then I’ll re-assess to possibly go long there. Stay tuned and trade safe!
As always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.
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