On its way north, the currency pair has established an ascending channel without any major hurdles other than the August high at 1.4727, indicates the hourly chart. The developments over the last one and a half weeks show resemblance to an unfinished cup and handle pattern, giving further signals that both long and short term trends are likely to be bullish.
Monthly Chart:
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Tests of major levels still to come
If the currency pair shows no surprises and continues the ascending channel, it will most likely linger by the bottom trend-line a little more, before bouncing off around 1.4650 where the lower channel trend-line as well as the daily Pivot Point lies, just before an upsurge towards the top trend-line at 1.4691. An upcoming surge is affirmed by the multitude of different supports, including SMAs, Bollinger Bands as well as other significant levels.
In case the pair is indeed attempting a cup and handle pattern, a dip outside of the channel towards the 55-hour SMA or further on to daily S1 at 1.4616 is expected. The upper Bollinger Band has been both tested and overstepped several times during August, suggesting the rate to be overbought - a contradiction with SWFX sentiment data that shows bears dominating the market with a 66 percent majority.
Hourly Chart:
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A positive trade balance and labour productivity data surprise caused a dip just moments ago, pushing the pair to overstep the channel line initially, but recovering soon after that. Next week starts with a break for the EUR/CAD currency pair because of Canadian Bank holidays.
Technical Indicators
© Dukascopy Bank SA