EUR/CAD Remains Long-Term Bullish After the Clean Rejection of the Fibonacci Support

EUR/CAD Remains Long-Term Bullish After the Clean Rejection of the Fibonacci Support

Published: September 18th, 2020

Weekly chart

EUR/CAD Weekly Technical Analysis 18 Sep 2020

EUR/CAD has established an extremely strong resistance near the 1.5880 area, which has been rejected 4 consecutive times starting back from the end of 2015. This resistance area still plays a very important role and is expected to be tested in the coming weeks.

The very strong indication of the bullish trend is the precise rejection of the 61.8% Fibonacci retracement level, applied to the last strong corrective downside move. And as long as the price remains above 1.5431 Fibonacci support, the uptrend should remain valid. The nearest and the strongest resistance is located near 1.5870, which means that there is another 300 pip growth potential from the current price.

Daily chart

EUR/CAD Daily Technical Analysis 18 Sep 2020

On the daily chart price, cleanly rejected the uptrend trendline at the beginning of September, confirming the validity of the uptrend. A few days ago EUR/CAD also rejected cleanly the 50% Fibonacci support at 1.5523 and bounced off the 50 Exponential Moving Average.

Currently, the most important support level to watch remains 1.5523, because if there will be a break below, further consolidation might take place, although it will not invalidate the bullish scenario as long as the 1.5431 support holds. The 88.6% Fibonacci retracement level at 1.5884 could be the upside target, but perhaps price might reach and reject a lower resistance level, which will be discussed in the following chart.

16-Hour chart

EUR/CAD 16-Hour Technical Analysis 18 Sep 2020

It is obvious that EUR/CAD has established two rage-trading areas. The first one was broken back in July, while currently the price is trading within the second, the upper range. The previous resistance area now became the support which was rejected. At the same time, the price remains above the 200 EMA, which yet again confirmes the uptrend validity. Perhaps price will be aiming for the top of the current range once again, and eventually could go even higher.

4-Hour chart

EUR/CAD 4-Hour Technical Analysis 18 Sep 2020

On the 4-hour chart, EUR/CAD broke above the downtrend trendline, corrected down, and fond the support at the trendline, which was rejected. Previously, there was a clean bounce off the 50 EMA at 1.5568, back on September 11. Then, on September 17 there was an attempt to break below the support, but a 4-hour candle failed to close lower. This goes to show that the 1.5527 - 1.5568 support area is being strongly defended by buyers and at this stage, only 4h break and close below 1.5527 could invalidate the bullish forecast.

In regards to the upside target, on this chart 2 Fibonacci indicators were applied. Fist Fibs applied to the last wave up occurred at the end of July, and second Fibs applied to the current corrective move down. It can be seen that 38.2% and 261.8% Fibs corresponding to the 1.5870 resistance level, which is very close to the previously discussed resistance at 1.5880.

1-Hour chart

EUR/CAD 1-Hour Technical Analysis 18 Sep 2020

On the hourly chart, price has reached and rejected the bottom of the ascending channel. Then EUR/CAD went up but bounced off previously established support zone near 1.5606 as well as the downtrend trendline. It is likely that buyers will be waiting for a confirmed breakout above the trendline and the resistance area before taking action. This means that if the price will continue to consolidate today, the buying opportunity can only be presented sometime next week.

Summary

Overall, the Canadian Dollar could be starting to look weak against most top fiat currencies. This is purely based on technical analysis, but certainly looks like EUR/CAD bullish tendency will continue as long as the support is being respected.

Upside targets

As per the weekly and 4-hour chart, the key resistance area and the potential upside target is located near 1.5870. This is 300 pips away front he current price, meaning that it can take up to 3-4 weeks before/if EUR/CAD will test this resistance.

Probability of a downtrend

While the trend is bullish, there is potential for further price consolidation and EUR/CAD might produce spikes below 1.5527. However as has been mentioned, only a 4-hour break and close below 1.5527 can invalidate the bullish outlook and result in price trending down towards 1.5400 psychological support.

Support: 1.5568, 1.5527,

Resistance: 1.5626, 1.5870

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