EUR/CAD Setting up “Bearish Engulfing” Candle after 20+ year TL Rejection

22. January 2016 · Write a comment · Categories: EDGE Chart of the Day · Tags: ,

Let me first tell you I have a EUR/CAD short position from earlier this week (near 1.4800) so I am in essence “talking my book.” However, the development by the end of the week was unexpected, but also a massive development technically. I felt I must tell you about it, even if you didn’t pick up on my cues from my tweet last week that it was already on my radar.

The EUR/CAD had tested the 20+ year trend line last week, and you can see that chart here:

1-22-16EURCAD1

You may have to check a couple different broker feeds to get those longer term values, but it is the same value I see at my MBT Desktop Chart as well:

1-22-16EURCAD3

If you take a closer look, what you will notice is the bearish engulfing candle on the weekly chart:

1-22-16EURCAD2

It is still early in the session, so anything can happen for the rest of the day and before the market closes. However, it would engulf even if we get 100+ pip rally. Also note we had a false breakout (noted red circles) above 1.5530 for this last week that will only add fuel to the fire. A close today back above 1.5466 would invalidate the engulfing pattern.

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer, I am short the EUR/CAD and am looking for an exit of position in the coming week.

 

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