Despite the data out just a few moments ago that Canadian manufacturing sales rebounded by a good 1.0% (vs. 0.4% expected), the medium-term lower highs and the lack of a clear short-term trend, we think this FX pair is looking bullish for these reasons:

  • There has been around 6 bearish-looking daily candles in as many days, yet we haven’t seen any downside follow-through. This is telling us that the bearish momentum is weakening and that a short squeeze rally could be on the cards.
  • Support around 1.5050 (old resistance) has been defended on daily closing basis for several days.
  • Price above 21-day exponential moving average
  • It may have already formed a higher low in the last week of February around 1.4880, relative to its previous low at 1.4760 hit in October of last year.
  • Price has been making longer-term higher lows and higher highs since bottoming out in August 2012.

So, we are anticipating a bullish breakout in the EUR/CAD for the above technical reasons. However if the 1.5050 support gives way then, in that case, we will reconsider our short term bullish view.

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DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

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