The EURCAD has started to trade around its resistance area which is visible in light grey in the above H4 chart after a strong rally elevated this currency pair from its support area, marked in light blue. Price action dropped to its support area with a gap to the downside as a result of the Greek referendum, but has quickly recovered. Price action was assisted by the interest rate cut out of Canada and the EURCAD is now searching for direction.
The Bollinger Band Indicator is supporting the current sideways trend as all three bands are flat. The lower band as well as the middle band is trading below the resistance area while the upper band is trading inside of the resistance area. Price action is trading between the middle band and the upper band. A breakdown below the middle band is expected to occur from where forex traders may opt to realize floating trading profits and exit their long positions.
Forex traders are recommended to seek short positions at 1.4115 and above and order to be positioned for the expected sell-off in the EURCAD as profit taking will occur and drive this currency pair to the downside. Conservative forex traders are advised wait for the EURCAD 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 1.1.3525 has been selected for a potential trading profit of 590 pips.
Forex traders should protect this trade with a stop loss level at 1.4245 for a potential trading loss of 130 pips which will result in a Risk-Reward (RR) ratio of 4.54.
Short @ 1.4115
TP @ 1.3525
SL @ 1.4245