No fresh plays are popping up on the radar for me, but this break above falling highs on EUR/CAD does pique my interest for a potential position soon. More gains for EUR/CAD ahead?
EUR/CAD Breaking Higher?
EUR/CAD has been on a tear higher in the last few weeks after bottoming out around the 1.4800 handle mid-August, likely on a combination of hawkish ECB comments and PMI reports propping up the euro versus a roller coaster ride of NAFTA headlines and weaker Canadian sales data finding sellers for the Loonie.
This has lead to a break in the pattern of falling highs since last April, but the market also happens to be now testing a strong area of previous interest, where we’ve seen resistance, support and consolidation around the area between 1.5300 – 1.5500 throughout 2018. This could be closely watched and reacted to by technical traders in the next couple of weeks.
Going forward, we do have some potentially big time catalysts coming up in September–most notably economic data from Canada (employment, PMI and inflation) and the always anticipated European Central Bank’s monetary policy meeting. So I think with the high probability of volatility coming this pair’s way, it’s probably one of the top candidates for a new position for me.
And with the current price action and sentiment bias in favor of the euro over the Loonie, mainly on a hawkish ECB and an uncertain NAFTA negotiation outcome, I’m looking for a sustained break higher on EUR/CAD for a long position.
That scenario could come this Friday with the latest Canadian employment data, but according to my friend Forex Gump there is a conflict between economist expectations and historical trends, so it’s tough to make a call there.
And if we don’t see a sustained break there, I’ll turn to the ECB meeting, which is another tough event to call as business sentiment remains positive but Euro area inflation data could be a concern with a pullback in both headline and core reads recently.
With so much uncertainty with top tier events, I’ve decided to stay in watch mode for now. That means no new orders but I will look to react within the next week or so based on the upcoming events mentioned earlier, as well as any major developments on the Brexit front and the oil markets.
Stay tuned and 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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