The EUR/CAD pair initially fell during the course of the day on Monday, just as the Euro lost against almost all currencies. However, the Canadian dollar is a little bit of an outlier when it comes to currencies at the moment as it has been weaker than most. With that being said, the market bounced off of the 1.4450 level, and formed a nice-looking hammer. The hammer normally is a buying opportunity, which I don’t see it as currently because of the fact that we are in such a massive downtrend.
It is possible that we bounce significantly from here, but I think that the 1.47 level is the top of a consolidation area that we have to deal with. That being the case, I feel that it’s probably best to wait to see if we get some type of resistant candle above, especially near the 1.46 or the 1.47 levels.
Nice-looking hammer, but...
This was a nice-looking hammer, but again, I feel that this market has been far too negative to start buying at this point. If it were perhaps a weekly hammer, I might consider buying but at this point time I think it’s just simply indicative of the market taking a rest as it has been so bearish. The market has fallen rather quickly, so grinding sideways for a while would make sense. On top of that, you have to keep in mind that the Canadian dollar seems to be in significant trouble against the US dollar, and that will of course put pressure on the CAD in general.
Going forward, the marketplace should continue to be rather negative overall and as a result I will sell the first signs of trouble at the aforementioned levels. On the other hand, we could break down below the 1.44 level, which would be the signal to me that we are heading to the 1.40 level, which at this point in time is still my longer-term target in this very bearish market. I have no interest in buying this market until we get above the 1.47 level on a daily close.