EUR/CAD has been trading sideways while respecting resistance at the 1.4450 minor psychological level and support at the 1.4300 major psychological level, which gives us a 150-pip trading range or rectangle pattern to play with. The pair is currently testing the rectangle’s resistance area, so get ready to go short if you plan to trade within the range. Stochastic is indicating oversold conditions, though, and with the pair currently at the resistance area, there’s a chance that bulls will attempt an upside breakout. Such a scenario is highly unlikely, though, since price has been respecting that there falling trend line since May.
Look familiar? If that chart looks familiar to you, that’s probably because you were able to read up on Wednesday’s intraday forex chart update. And if you can still recall, I presented two scenarios back then, and the pair obviously chose the ascending channel scenario. However, price keeps getting rejected at the 0.7560 minor psychological level (dashed horizontal line) and price seems to have a difficult time pulling away from that well-respected falling trend line that I’m beginning to suspect that the downside channel breakout scenario will play out sooner or later. I could be wrong, of course, so always make sure to practice proper risk management.
That there rectangle pattern on GBP/CAD’s 1-hour chart seems very simple enough, but it’s actually quite complicated. You see, that rectangle’s support area at 1.6700 has significant market interest since the last time price got there was way back in 2013. You can go ahead and check it out for yourself by zooming out to the higher times frames like the dailies or weeklies. And given that level of market interest, I’m inclined to believe that the pair will climb higher. However, price is also approaching the 100 SMA and it may act as dynamic resistance. Also, stochastic is signalling overbought conditions, so there’s a chance that resistance at 1.6900 will hold and the pair will move lower to test support again.
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