EUR/CAD surged on Monday, after it ended Friday near the 1.5210 support zone. The pair is trading above the prior downside channel that contained the price action from mid-March until the 6th of June, within a new short-term upside channel. Thus, we would consider the near-term outlook to be positive for now.
If the bulls maintain their momentum, we would expect them to challenge the 1.5360 resistance zone soon, and if they prove strong enough to overcome it, then we may see them pulling the trigger for our next resistance of 1.5430. Another break above that level could see scope for some more upside extensions, perhaps towards the 1.5470 level, defined by the inside swing low of the 30th of April.
Taking a look at our short-term momentum studies, we see that the RSI rebounded from near its 50 line, while the MACD, although below its trigger line, is showing signs of bottoming within its positive territory. It could cross above its trigger line soon. These indicators reveal upside momentum and support somewhat the case for EUR/CAD to continue trading north for a while more.
On the downside, a dip below the lower end of the new short-term upside channel is the move that would make us abandon the bullish case and take the sidelines. Such a move could pave the way towards the 1.5210 support level. If that level does not hold and breaks, then we may have the completion of a failure swing top, which could turn the short-term outlook negative and perhaps see scope for extensions towards our next support territory of 1.5110.
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