InstaForex - Analytics

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EUR/CAD down before up

It looks like EUR/CAD established an uptrend moving towards high highs and higher lows. The confirmation of the uptrend could be a breakout of the 61.8% Fibonacci retracement level applied to a high hit on January 30 and a low hit back on April 17.

However, the pair broke below the ascending channel and at the same time crossed 50 moving average. EUR/CAD seems to be in a correctional phase where the rate should move lower. The Fibonacci, applied to the channel breakout point shows two potential target levels. The first is S1 (1.3713) and second is S2 (1.3608). The S2 looks much more reasonable target as its not only 23.6% level of the channel breakout Fibs, but also 38.2% of the major Fibs retracement mentioned earlier.

Consider selling EUR/CAD anywhere between the current level and R1 (1.3800) targeting at S2 (1.3608). Keep in mind that this is only a correctional move and in the longer term the rate is likely to continue its growth.

Support: 1.3713, 1.3608

Resistance: 1.3800, 1.3884

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