Last week’s strong decline has changed EURCAD to bearish after the upside failed above a key Fibonacci retracement point.
Since the bounce from June’s low trading in EURCAD has been volatile but lacking a sustained follow through in either direction with the market fluctuating around the 21 week moving average and remaining within what has been a broadly flat Keltner channel – as you can see from this chart.
A positive trigger in RSI during August was confirmed by a spot move in early September. Allowing for a false break during October that we did not respond to, upside targets were met. Most notably a 50% Fibonacci correction level in the immediate aftermath of the US election (in fact prices almost recovered 62% of this years decline in that spike).
The aggressive rejection of those extremes was continued last week with both the spot EURCAD and the RSI moving strongly through their averages.
So sentiment has changed to bearish. There is scope for a reaction but any such profit taking should be capped near 1.4500, last week’s Marabuzo line. A move through the 1.4257/64 area (Jun & Oct lows) confirms and exposes EURCAD sentiment to 1.4182 and 1.4061.
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