Multiple signals suggesting possible short-term upside for EUR/CAD but with moving average caution.

EUR/CAD

Due to the moving averages fanning out, we would like to see price reclaim the 21 EMA for confidence to hit at least target 1. EUR/CAD RSI divergence and Fibonacci cluster is suggesting we may see this event occur towards the end of the Asian session today.

 

Key Points:

  • Caution – Price holding below the 200 EMA
  • Caution – Price holding below the 50 EMA
  • Fibonacci 78.6% retracement (September low – September high)
  • RSI divergence at price lower low and RSI lower high
  • Bullish engulfing pattern supported with increase in volume
  • Watch price to break low again and produce another bullish candle reversal with volume increase at optimal entry price

 

Key Levels:

Support – 1.5500, 1.55150

Resistance – 21 EMA, 50 EMA, 200 EMA, 1.5580, 1.56525

 

Entry Zone:

Optimal entry provides the greatest reward to risk ratio while supporting entry is a zone for reversal signals.

Optimal Entry – 1.55000

Supporting Entry – 1.55156

 

Candle Reversals for entry

  • Bullish Hammer
  • Bullish Engulfing
  • Bullish PiercingCandlestick

 

The Risk:

As traders, it is your job to mitigate the risk and only trade structures that provide high probability and great reward to risk ratios.

If you are not comfortable with defined exit levels, experiment with Moving Averages to help set solid exit rules to protect your capital.

 

IF: Price breaks below 1.54690 – this would suggest the structure is not in our favour and would be wise to reduce exposure or close the trade until a solid signal gives us reasons to re-enter.

 

Reward / Reward Targets:

Optimal Entry 1.55000 – Target 1 1.5580 = 2.5x Reward to Risk

Optimal Entry 1.55000 – Target 2 1.56525 = 5x Reward to Risk

Supporting Entry 1.55156 – Target 1 1.5580 = 1.5x Reward to Risk

Supporting Entry 1.55156 – Target 2 1.56525 = 2.8x Reward to Risk