• In my daily Euro versus Canadian dollar analysis, I have begun to notice that the 1.4750 level being a bit of a magnet for price.
• We should also keep in mind that the 50 day EMA is right around there as well.
• I think at this point in time, it makes sense that we're just hanging around trying to sort out whether or not we can break out or break down.

When you look at the longer term charts, it's easy to see that we have been moving essentially in 150 point increments. Right now, we are between two major areas of support and resistance, namely the 1.49 level above and the 1.46 level below. All things being equal, I think we are just simply killing time and trying to sort out where to go next.
 

The Set Up

We do have a little bit of divergence as EUR/CAD price has been drifting a little lower, but the moving average convergence divergence indicator has been drifting higher. So, I think at this point it shows a lot of confusion. The euro of course is a very sideways currency in general. So that's not a huge surprise. What I will do is look at the Friday candlestick of last week as a bit of a guidepost.

(Click on image to enlarge)

If we break down below the bottom of it, then I believe that this market probably drops towards the 1.46 level. On the other hand, if we can break above the top of it, then it's very possible we will go looking towards the 1.49 level. Keep in mind that both of these are major currencies of course and playing a market like this get you away from the Federal Reserve, which obviously will be making a lot of noise via assumptions after the PPI and CPI numbers on both Thursday and Friday come out of the United States.

This is just simply a way to sidestep some of that. All things being equal, it is fairly neutral. But pay attention to the candlestick from last Friday. That could be your cue to get involved at this point.

More By This Author: