Timeframe: H4 Recommendation: Short Position
Entry Level: Short Position @ 1.5275
Hedge Level: Buy Stop Order @ 1.5400 (Take Profit Level @ 1.5500)
Take Profit Zone: 1.4950 – 1.5000
Stop Loss Level: 1.5400 (We will not use a stop loss order to close this trade for a loss and execute this trade as advised below). We do use stop loss orders to protect our profits and close a trade for a profit. Each trader may decide if and where they would like to place the order.
The EURCAD has rallied as visible in this 4-hour chart (H4). This currency pair is now trading at strong resistance which is marked by the light red box in the above chart. We expect the EURCAD to correct back down to its support zone which is marked in light blue in the above chart.
MACD shows momentum fading which signals potential future weakness as it also formed a negative divergence. RSI is trading in neutral territory after it broke down from overbought conditions formed a negative divergence of its own.
We recommend a short position at 1.5275 with a potential second entry level at 1.5500. We also recommend a buy stop order at 1.5400 with a take profit target of 1.5500 in order to hedge our short position and before adding new short positions to this forex trade.
Traders who wish to exit this currency trade at a loss are advised to place their stop loss order at 1.5400. We will not use a stop loss order and execute this trade as recommended. Place your take profit order at 1.4975.
Here are the reasons why we call the EURCAD currency pair lower:
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