EUR/CAD Approaches Key Resistance Level on the Daily Chart
EUR/CAD is currently trading near its highest resistance level since 2021, around 1.5200. This price zone has been tested multiple times in recent months, indicating strong resistance that the market has struggled to overcome. The repeated testing without a definitive breakout suggests that selling pressure may be building, which could lead to a reversal if the support below is breached.
Key Resistance at 1.5200:
This resistance level has been challenged several times, establishing it as an important psychological barrier in the market. The ongoing difficulty in breaking through this area supports the notion that a retracement could occur in the coming weeks.
Support at 1.5075 (Potential Trigger Level):
The 1.5075 level is identified as a significant support point in the short term. If the price drops below this level, it could generate considerable selling pressure, indicating that the pair has lost critical support and triggering potential short positions.
Potential Selling Opportunities:
Given the recent behavior of testing resistance and the absence of a sustained breakout to the upside, the current market structure suggests a possible sell-off. The trading plan may include:
Short Entry: A short position could be considered if the price breaks below 1.5075, confirming the loss of support and signaling a potential reversal. Upon this breach, EUR/CAD could decline towards the 1.4900 level, where another crucial support area exists on the daily chart.
Alternative Scenario:
Conversely, EUR/CAD remains in an uptrend (as indicated by the black trendline on the chart), suggesting that a breakout above the 1.5200 resistance might still occur. If this level is surpassed and the price maintains above it, EUR/CAD may transition into a new price range. In this scenario, the current resistance might turn into support, with the potential for EUR/CAD to rise towards the 1.5350 region in the coming days, where additional resistance can be anticipated on the daily chart.
Caution Against Fake Breakouts:
Levels of resistance in EUR/CAD present ideal scenarios for fake breakouts that can lead many traders to incur losses. A fake breakout occurs when the price temporarily breaks above or below a relevant level, only to reverse quickly, misleading traders. These often manifest as candles with large wicks or tails. Therefore, it is crucial to seek confirmation before entering a trade to mitigate the risk of getting caught in such false movements.
Monitoring Key Levels
In summary, as EUR/CAD approaches significant resistance at 1.5200, traders should carefully monitor both resistance and support levels. A prudent approach will involve waiting for confirmation of price movements before entering positions, particularly in the context of potential fake breakouts.
Disclaimer:
74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Past performance is not necessarily indicative of future results. The value of investments may fall as well as rise and the investor may not get back the amount initially invested. This content is not intended for nor applicable to residents of the UK.
Key Resistance at 1.5200:
This resistance level has been challenged several times, establishing it as an important psychological barrier in the market. The ongoing difficulty in breaking through this area supports the notion that a retracement could occur in the coming weeks.
Support at 1.5075 (Potential Trigger Level):
The 1.5075 level is identified as a significant support point in the short term. If the price drops below this level, it could generate considerable selling pressure, indicating that the pair has lost critical support and triggering potential short positions.
Potential Selling Opportunities:
Given the recent behavior of testing resistance and the absence of a sustained breakout to the upside, the current market structure suggests a possible sell-off. The trading plan may include:
Short Entry: A short position could be considered if the price breaks below 1.5075, confirming the loss of support and signaling a potential reversal. Upon this breach, EUR/CAD could decline towards the 1.4900 level, where another crucial support area exists on the daily chart.
Alternative Scenario:
Conversely, EUR/CAD remains in an uptrend (as indicated by the black trendline on the chart), suggesting that a breakout above the 1.5200 resistance might still occur. If this level is surpassed and the price maintains above it, EUR/CAD may transition into a new price range. In this scenario, the current resistance might turn into support, with the potential for EUR/CAD to rise towards the 1.5350 region in the coming days, where additional resistance can be anticipated on the daily chart.
Caution Against Fake Breakouts:
Levels of resistance in EUR/CAD present ideal scenarios for fake breakouts that can lead many traders to incur losses. A fake breakout occurs when the price temporarily breaks above or below a relevant level, only to reverse quickly, misleading traders. These often manifest as candles with large wicks or tails. Therefore, it is crucial to seek confirmation before entering a trade to mitigate the risk of getting caught in such false movements.
Monitoring Key Levels
In summary, as EUR/CAD approaches significant resistance at 1.5200, traders should carefully monitor both resistance and support levels. A prudent approach will involve waiting for confirmation of price movements before entering positions, particularly in the context of potential fake breakouts.
Disclaimer:
74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Past performance is not necessarily indicative of future results. The value of investments may fall as well as rise and the investor may not get back the amount initially invested. This content is not intended for nor applicable to residents of the UK.
Disclaimer
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