Technical Outlook – EURCAD, EURCHF and CADCHF

Yesterday’s ECB meeting remained largely unnoticed as the impressive numbers of US labor market gained attention of the forex market players. However, the dovish tone of ECB policy makers together with no monetary policy action dent the Euro region currency against majority of its counterparts. Meanwhile, following is the brief technical overview of EURCAD, EURCHF and CADCHF pairs.

EURCAD

• The pair continued observing the descending trend channel on the daily chart, signaling the on-going down-trend. Yesterday, the pair dipped below 50% Fibonacci retracement level of its July 2013 to March 2014 up-move indicating a test of 1.4360 level, encompassing support line of the channel; however, the oversold level of RSI signals a pullback towards psychological resistance of 1.4500, also including 50% Fibo. level. A break of 1.4500 can fuel the pair towards 1.4575 and 1.4630-35 levels while a sustained trading above 1.4630 can cause the pair to test the crucial resistance zone 1.4700-10, coinciding 200-day EMA and upper line of the channel.
• On the downside, a break of 1.4360 can cause the pair to test 1.4300 and 1.4250 (61.8% Fibo. level), breaking which the pair can become vulnerable to test 1.4100-1.4080 support zonel, which can act as a medium term support for the pair.

EURCHF

• EURCHF continued its sluggish movement as indicated by the descending trend line. However, the pair reversed from 1.2138 level yesterday backed by RSI reversal from oversold region. Currently, the pair is heading towards 1.2165–70 resistance zone, encompassing descending trend line and 23.6% Fibonacci Retracement Level of its January – February downturn. A break of 1.2170 can fuel the pair towards 1.2200 and 1.2215 (38.2% Fibo. level), breaking which 200-day EMA can cap the pair 1.2225 levels.
• On the downside, 1.2135-30 can become immediate support for the pair, breaking which the pair becomes vulnerable to test February low and psychological support level near 1.2100.

CADCHF

• Having breached the 200-day EMA during late June, the pair traded sideways until yesterday when it rallied to the highest level in 22 weeks. The overall sentiment of the pair seems improving as indicated by the ascending trend channel. However, the current overbought level of RSI coupled with the nearness to the important resistance level near 0.8465-70 restricts the chances of a drastic up move by the pair. On the downside, 200-day EMA near 0.8310 becomes immediate support for the pair to test, breaking which the support line of the channel near 0.8250 becomes important for the pair before it tests the 100-day EMA and 23.6% Fibo. level confluence zone near 0.8205 - 0.8200, which also acts as near term support for the pair.
• On the upside, a break of 0.8470 can fuel the pair towards 0.8535-40 resistance zone, breaking which the pair can rally towards 0.8675-80 zone, encompassing the 50% Fibo level. A sustained break above 0.8680 negates the chances of near-term down trend by the pair in addition to fueling the pair towards 0.8800.

Anil Panchal
Market Analyst
Admiral Markets