Matt Simpson, CFTe, MSTA
CityIndex
As we approach the end of the trading week EURCAD may provide a short opportunity, provided the data Draghi talks the Euro down and inflation data for Canada is strong tonight.
On one hand 1.401 support has been tested several times so we could in fact be witnessing a bottom pattern in the making. On the other hand if this level does break, we can expect more downside and would also confirm a Head and Shoulders Top during a downtrend from the March 2014 highs
If you are to trade the H&S downside break then we can either set up a sell-stop below the neckline with a stop above in a 'set and forget' fashion. There may however also be an opportunity to trade on D1 before getting to the neckline.
Yesterday closed with a Dark Cloud cover and price remains below the Monthly Pivot. Tis may turn out to be a 'right shoulder' to the H&S and provide a short set up to the neckline.
With Draghi speaking tonight there is a downside risk for Euro and if inflation data comes in strong from Canada then this should help EURCAD make its way down to 1.401.
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