EUR/CAD Buying and selling Technique: Pending Brief at 1.5276
Bearish EUR/CAD is one in every of my high buying and selling alternatives in 2019, eager to enter brief
BoC could assist fee hike estimates this week, eager to promote Euros for greater liquidity
Threat-reward setup requires a climb to 1.5276 in an effort to goal October rising development line
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EUR/CAD Elementary Bearish Argument
Typically, I’m basically bullish the Canadian Greenback in 2019 towards most of its main counterparts excluding the US Greenback and the anti-risk Japanese Yen. In brief, the Financial institution of Canada envisions elevating rates of interest to a ‘impartial vary’ to maintain inflation beneath management. This could entail maybe three fee hikes and the markets are underpricing this. Learn extra about my high buying and selling opportunities right here.
If that is certainly the case this yr, then the markets will finally should meet up with actuality and we could also be in for positive factors within the Canadian Greenback. On this case, I’d be trying to go lengthy CAD towards comparatively basically dovish currencies. A kind of would be the Euro. Political uncertainties, Brexit penalties and fewer hikes than its Canadian counterpart assist this argument.
Within the near-term, the BoC has its subsequent financial coverage announcement this week and it might reinforce its dedication to hike this yr. The danger right here is that it follows the trail of the Fed and takes on a comparatively dovish tilt. As such to keep away from extra volatility, I’m fascinated with shorting EUR/CAD versus AUD/CAD or NZD/CAD. The previous presents extra liquidity than the latter ones due to the Euro’s reputation.
EUR/CAD Technical Evaluation – Downtrend to Speed up?
EUR/CAD has confirmed a number of bearish warning indicators, hinting that it’s maybe coming into a dominant downtrend for the medium-term. From a risk-reward perspective, the decline beneath the rising assist line from late November has made for a troublesome setup to catch positive factors into the following development line from October. My goal is the December 14th low at 1.50852 (simply above that line) with a day by day shut cease above 1.53713.
Thus, for not less than a two-to-one risk-reward ratio, I’m trying to enter brief at 1.5276 in hopes that costs will rebound within the interim. In any other case, I will likely be maintaining a detailed eye on the Canadian Greenback crosses talked about earlier for additional alternatives down the street. It’s possible you’ll observe me on twitter @ddubrovskyFX for updates if this setup is triggered or for different trades I soak up CAD.
EUR/CAD Day by day Chart
Chart created in TradingView
FX Buying and selling Assets
— Written by Daniel Dubrovsky, Junior Forex Analyst for DailyFX.com
To contact Daniel, use the feedback part under or @ddubrovskyFX on Twitter