EURCAD Intraday Strategy
Since the mass GBP selling in the Foreign Exchange (Forex) market following the UK referendum results many currency pairs have held in a range. Many traders have hedged their positions and are unwilling to unwind until more clarity is provided.
The tight range can easily be seen in EURCAD 4hr chart.
EURCAD 4hr Chart
Please click on the chart to enlarge:
EURCAD 4hr Chart II 02/07/16
As you may note from the chart Euro Cad is being held in a tighter range between the support and resistance levels. Ultimately, the price may be squeezed higher or lower, depending on which level gives way. It is difficult to predict which level will be breached (support or resistance) but once a breakout takes place the intraday trend may be affirmed.
A breakout is often affirmed once the price is able to close above the resistance or below the support. Following a breakout the price tends to re-test the breached level before resuming the anticipated trend. The targets for either breakout, bearish or bullish has been marked on the chart.
Relating specifically to EURCAD, there is little time for a breakout to take place. Once the market reaches the vertical black line and a breakout does not take place, the odds for a successful breakout will be substantially lower.
There could be a number of triggers for bearish / bullish breakout. The ECB considering looser QE rules may weaken the Euro while an economic slowdown in China may pressure crude oil, which would in turn reflect in a weak Canadian Dollar. We are less keen on guessing the trend, which is why a technical signal is required for EURCAD intraday trend.
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