EURCAD Best buy level on a 2 month horizon

The EURCAD pair has been trading within a Channel Down since December 2020. Recently it broke above its 1D MA50 (blue trend-line) but failed to maintain momentum and dropped back near the mid-May bottom.

In our opinion this is not alarming as the 1D MA50 break-out was a first step towards entering into the Lower High phase that took place after the 1D RSI showed a bullish divergence (Higher Lows) against the price (Lower Lows). As you see, when this bullish divergence happened within the Channel Down, the pattern formed a bottom and the price started gradually to rise towards the Lower Highs trend-line.

The last two Lower Highs took place exactly on the 1D MA200 (orange trend-line) and on a Fibonacci basis, the (almost) reached as high as the 0.5 Fib retracement level. As a result, if mid-May was the bottom, you have a solid buy entry now, on which you can take the profit when the price hits either the 1D MA200 or the 0.5 Fib. Whichever comes first.

If the mid-May low breaks, expect a closer drop to the Channel's Lower Low and if that gets compromised too, a failure and invalidation of the whole pattern towards the -0.236 Fibonacci extension.




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