EURCAD has been in a downtrend since falling from the June 2 high of 1.5257. There is risk to the downside since the momentum indicators are bearish. RSI is below 50 but not yet oversold, so there is a possibility of a move lower. The MACD is falling and approaching close to zero. Other bearish signals were given when prices broke below the 50-day moving average in mid-June. Meanwhile, the tenkan-sen has crossed below the kijun-sen line, giving a bearish signal, while prices have pierced the daily Ichimoku cloud.
EURCAD has been holding above the cloud until last week. The cloud top stands at 1.4794 and was acting as support until it failed and prices have dropped to threaten 1.4691, which is the 38.2 Fibonacci retracement level of the upleg from 1.3782 to 1.5257. The mid-point of this February to June uptrend is a critical support level. Falling below this level would start to change the medium-term bullish market structure.
Major resistance is expected at the 23.6% Fibonacci at 1.4907. A sustained beak above this could weaken the recent downside bias and see prices target the June high of 1.5257 for a resumption of the uptrend.
Looking at the bigger picture, EURCAD still maintains a bullish outlook as long as the market remains above the cloud. The rising 50-day moving average and its positive alignment with the 200-day moving average also supports a bullish view for the medium-term.
