The EUR/CAD pair initially tried to rally during the course of the session on Friday, but as you can see turned back around above the 1.4250 level. That being the case, we ended up forming a shooting star, and it suggests that the marketplace should continue to go much lower, probably heading down to the 1.40 level. With that being the case, it appears that the market will more than likely head down to the 1.40 level where I see a significant floor. Whether or not we can go below there is hard to tell at the moment, but I tend to believe it’s not going to happen quickly due to the fact that we are at the very end of the year.
The shape of the candle does suggest that every time we rally the sellers will step back into the marketplace and punish the Euro. It’s not even that I necessarily like the Canadian dollar, it’s just that I recognize that North America is in better shape than Europe. That’s essentially how I look at this pair overall.
Short-term charts
For the rest of the year, I will probably trade this marketplace based upon short-term charts. I’m going to sell rallies, as the sellers continue to step into play. I have no interest in buying this market because although we had a significant bounce a couple of weeks ago, we have all but killed the momentum that could have been picked up from the 1.40 handle. I don’t know that we can break down below there, and therefore I’m not even worried about it at the moment. I believe that ultimately this pair will break down below there, but it may not happen until 2015. It just simply may not be enough liquidity in the marketplace to make a decisive move like that, and it’s also very likely that we need to see what happens once the large firms come back from holiday in order to determine where the trend is going to go from here.
