The EURCAD was exposed to a very sharp rally during yesterday’s trading session which took this currency pair up in excess of 1,000 pips. This move was very unusual and forex traders should expect be prepared for a pullback based on profit taking, especially by short-term traders who will lock in floating trading profits and exit their long positions. The next few trading days could see some sideways trading action
The Bollinger Band indicator has followed the strong rally in the EURCAD and all three bands are sloping higher. The upper band was able to breakout above its resistance area, visible in light grey in the above H4 chart, but is expected to breakdown. The middle band is approaching its resistance area and the lower band has moved above the support area which is marked in light blue. A full price action reversal cannot be ruled out at current circumstances.
Forex traders are advised to enter short positions at 1.5350 and above in order to be well positioned to profit from the expected sell-off in this currency pair. Conservative forex traders should wait for price action to break down below the middle band of its Bollinger Band Indicator as this would result in a change of momentum to bearish. A take profit target of 1.4200 has been selected for a potential trading profit of 1,150 pips.
Forex traders should protect this trade with a stop loss level at 1.5600 for a potential trading loss of 250 pips which will result in a Risk-Reward (RR) ratio of 4.60.
Short @ 1.5350
TP @ 1.4200
SL @ 1.5600