EUR/CAD: Looking For A Sell-Off At 1.5150
EUR/CAD is currently trading around the 1.5100 area. I believe price is at a critical point and we could see the pair sell off quite heavily in the coming weeks. This is primarily due to Euro weakness and also OPEC announcing more oil cuts which should strengthen the Canadian Dollar with higher oil prices.
The monthly closed bearish again during February after a large January bearish engulfing marubozu closure. I believe the current pullback is to entice buyers into the market, therefore I am looking for the pair to drop a lot further in the coming weeks as we rejected the monthly resistance last week.
The weekly as mentioned above closed as a shooting star rejection candle from the monthly resistance of 1.5200. The pullback I am anticipating will form a three-pin pattern which is another confirmation that price is ready to decline.
The daily time frame had a bearish engulfing candle last Thursday from monthly resistance and took out three days worth of price action. This shows that there is a lot of selling pressure in the monthly resistance area. It was a very strong daily candle and we never sell straight off the back of one of these candles which have marubozu characteristics. Buy low and sell high! Therefore, I am waiting for a pullback to enter a short position.
The 4H time frame shows clearly a potential head and shoulders pattern forming. I need to see a third drive towards the highs in at 1.5150 resistance area which is also a golden fib region to take shorts. My first take profit area is 1.4975 and then looking to target weekly support for a second take profit area at 1.4900.
This trade will be invalidated if we push further into the monthly resistance area and close above 1.5200. If we see price fall from here and do not see a test of the 1.5150 resistance I will wait for a break of 1.5050 and enter on the retest of the newly broken support which will have turned resistance.