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EUR/CAD price analysis: holds the top of the wedge

By Alpha Analysis

EUR/CAD price analysis: although signals are far from strong, selling at trend line resistance offers ample reward against risk set-up

EUR/CAD price analysis

Market highlights from the past week

Monday July 13: in comments on Monday, German Chancellor Merkel stated that Italy and Germany had agreed on the basic structure of the recovery fund, but she was unable to say whether agreement would be reached on the budget and recovery fund at this week’s Summit

Tuesday July 14: there was some caution ahead of Wednesday’s Bank of Canada policy decision 

Wednesday July 15: there were comments from French officials on Wednesday that they believe a deal can be reached this week on the EU recovery fund

Thursday July 16: the ECB made no policy changes and President Lagarde indicated the whole PEPP emergency bond-buying envelope would be used

Friday July 17: markets remain focused on the EU Summit which convened in Brussels

EUR/CAD Price Analysis

Let us have a look at the technical viewpoint: 

Monthly: price has moved sideways with four successive monthly Inside Bars. This highlights indecision and the lack of real trend in this timeframe. 

Weekly: the gap was closed from 1.5150-1.5375 (week March 2 -10). Mixed results. The RSI (Relative Strength Index) is close to 50 highlighting we are non-trending 

Daily: the 50 per cent Fibonacci level is located at 1.5523 (from 1.5991-1.5053). The cross posted a Bearish Outside Day on July 15. This candle is often seen at the top of a trend and the start of a new downward bias. 

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Intraday four-hour: forming a bearish Ending Wedge pattern. A break of 1.5390, trend line support, and the measured move target is 1.5226. We have seen price rejection of the trend of higher highs this morning 

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Outlook: although signals are far from strong, selling at trend line resistance offers ample reward against risk set-up. 

Possible trade set-up: 

Action: selling at the market (currently 1.5553)

Stop: 1.5593 (above the wedge)

Target: 1.5226 (wedge target)

Potential return on risk to first target: R8.1 (reward 327/risk 40)

Risk Warning - Your capital is at risk - Losses can exceed deposits

Trading spot foreign exchange and futures on margin carries a high level of risk and may not be suitable for all investors. You may lose all your capital. Past performance is not indicative of future results. The high degree of leverage can work against you as well as for you. Before deciding to invest in spot foreign exchange or futures you should carefully consider your investment objectives, level of experience, and risk appetite. If you are in any doubt about investment or the mechanics of such products, you should seek independent financial advice

Euro / Canadian dollar
Daily change
Low: 1.5474
High: 1.55675