I’m seeing a textbook correction setup on the 4-hour chart of EUR/CAD today!
Will this area of interest attract sellers soon?
Check out the Fibonacci retracement levels I’m watching below.
EUR/CAD 4-hour Forex Chart by TradingView
Euro bears have been on a roll lately, as market players keep pricing in stronger odds of an interest rate cut from the European Central Bank (ECB) in June.
On the flip side, the Canadian dollar has been able to ride the bullish wave of crude oil, which is currently being propped up by supply concerns stemming from geopolitical tensions.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the euro and Canadian dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
EUR/CAD has been in correction mode recently, as sellers are probably booking profits off the recent slide. As a result, the pair is approaching potential resistance levels that might draw the attention of even more euro bears.
Price is already testing the 38.2% Fib level at 1.4620 but might still be in for a larger pullback to the 50% Fib at 1.4643 near the pivot point level or the 61.8% Fib that lines up with a former support zone.
If any of these hold as a ceiling, EUR/CAD could set its sights back on the swing low at 1.4547 around S1 (1.4550) and a minor psychological support.
A break above the Fibs, on the other hand, could spur a move to the next upside targets at R1 (1.4700) then R2 (1.4800). After all, the 100 SMA is above the 200 SMA to reflect the presence of bullish vibes.
Then again, the gap between the moving averages has narrowed significantly to hint at a potential bearish crossover while buying momentum is losing steam.
Just don’t forget to keep an eye out for the euro zone flash CPI readings and Canada’s employment report when trading this one!