EURCAD has steadied in the 1.4675 region following the sharp pullback from around the 1.5100 level where a double top was formed. However, despite the bearish signal, the pair remains above its long-term moving averages and the momentum indicators are pointing to an easing of the selling pressure.
The fast stochastic (%K) has just crossed above the slow stochastic (%D), though they both remain within the oversold area, while the RSI has flatlined slightly below the 50 neutral level.
With the 100-day simple moving average (SMA) lurking about slightly below 1.4600, this is the key support to the downside that could determine whether the latest slide is just another correction within the broader uptrend or the start of a bearish reversal.
Should the pair slip below the 100-day SMA, currently at 1.4588, the next major support could come at 1.4230, which was a low in both January and February. A drop below this mark would shift attention to the 200-day SMA.
However, if EURCAD sees further improvement in positive momentum, the first test looks set to be the 50-day SMA at 1.4744, followed by the 20-day SMA at 1.4823. Higher up, the 20-month peak of 1.5112 from April would be the next big challenge for the bulls. A break above this double top would signal a resumption of the uptrend that began in August 2022. Even higher, the 200% Fibonacci extension of the March-April downleg at 1.5296 would likely become the next target.
In brief, EURCAD’s outlook is at risk of turning bearish should the 100-day SMA fail to act as support, while a climb above 1.51 is needed to reinforce the positive longer-term picture.
