The EUR/CAD pair fell during the course of the session on Tuesday, but for the second day in a row formed a hammer. The 1.48 level looks to be supportive, and as a result I think that we may get some type of bounce. I don’t know that this is going to be a trend change a move by any stretch of imagination, but I could see a bounce to the 1.50 level on a break above the top of the hammer.
On the other hand, if we broke down below the bottom of the hammer, I think we would head down to the 1.45 level, which is the next major support area from a long-term standpoint. Not only does it show significant support, but it is also a large, round, psychologically significant number. With that, it makes a decent target on a break down in my opinion.
Oil markets.
While this is a necessarily the first pair you think of when it comes to crude oil, it does have a certain amount of correlation to that market. After all, the Canadians export a lot of oil, just as the Europeans import a lot. With that being said, I believe that the oil markets may pull back slightly, and that my give us reason enough to see the bounce. On top of that, the Euro has been a bit oversold recently, so a bounce from this massively supportive area is in a huge surprise in my opinion.
That being said, I believe that the downtrend will probably continue over the course of the summer, but a corrective bounce is not a big thing to ask. This is especially true considering the last couple of candles, so quite frankly I look at buying as a short-term opportunity, followed by a potentially longer-term opportunity selling.
While I know that this is in a pair that a lot of you will typically trade, the spread is decent, as most brokers will offer about a 4 pip spread. That being the case, and the fact that it is two major currencies, there’s no reason not to be paying attention to this nice trending market.
