EUR/CAD: Time For A Turn?

Peter Adamson

From August 2012 to March 2014, EUR/CAD enjoyed a sustained rally of nearly thirty-five cents while EUR/USD had a rather anaemic sideways move by comparison. The Euro then declined against most majors from February/March onwards.

What is interesting about the EUR/CAD pair is the timing of the corrections. The pair clearly found support at the 50 percent level in November 2014 and again in January 2015, then rallied 438 pips very near the 50 percent expansion of the time range from August 2012 to March 2014 (first green arrow). The 50 percent level did not hold, and the market continued to decline, arriving at the 61.8% support level precisely at 61.8% of the time range (second green arrow).

EUR/CAD Weekly Chart

When price and time square this way we know we have the odds in our favour. The market already gave us some bounce last week, with a low of 1.3392, about 60 pips below the support level. 60 pips is not a particularly large difference when dealing with ranges of this magnitude. What is important is that the market did find support at this level, and found it at a significant point in time.

The down-trend may well continue as it did after the 50% support level, but it will likely make an effort to rally first.