Technical Analysis – EURCAD stalls between 50-SMA and 100-SMA

Anthony Charalambous, XM Investment Research Desk

EURCAD corrected northwards from a twenty-two-month low of 1.4573 but failed to close above the 100-day simple moving average (SMA). Sellers aggressively came on board, pulled the price down and slightly sideways to trade between the 50- and 100-day SMAs.

The pair is now located in the Ichimoku cloud, and directional momentum seems to have evaporated, something also reflected by the RSI as it hovers marginally above the 50-level, while the MACD has slightly inclined above zero, but remains beneath its trigger line. Despite this, the downward-sloping 200-, 100- and 50-day SMAs still show that a bearish bias insists.

In the negative scenario, if resistance around 1.4860 holds, which is the 50.0% Fibonacci retracement level of the down leg from 1.5145 to 1.4573, and the price moves through the 38.2% Fibo and the 50-day SMA, support could come at 1.4750, taken from the lows of October 2018. If selling picks up, the 1.4573 low could be revisited once the support of 1.4710 is breached, which is the swing low and the 23.6% Fibo.

Moving up, if the bulls manage to push past the 50.0% Fibo of 1.4860, some resistance could then come from the 100-day SMA currently at the 1.4900 handle. Violating the 61.8% Fibo of 1.4927 too, the way could open towards the resistance region of 1.4980 – 1.5010, where the 200-day SMA lies.

Overall, the short-term outlook is neutral and a close above 1.4860 or below 1.4710 could reveal the directional bias.