EUR/CAD has been in a slide mode since Friday, when the pair hit the resistance zone of 1.5115. On the 4-hour chart, we see that the pair has been trading below a downside resistance line since January 10th and thus, we will consider the short-term outlook to be negative for now.
At the time of writing, the rate is testing the 1.4955 support barrier, marked by the low of February 5th, the break of which would confirm a forthcoming lower low and could initially pave the way for the 1.4915 zone, which proved to be a key support area on November 14th, 15th and 16th, as well as on December 3rd. If that level fails to stop the price from dropping lower this time, its break could encourage the bears to drive the battle towards the 1.4850 territory, a support defined by the lows of November 12th and 13th.
Looking at our short-term oscillators, we see that the RSI lies below 50 and looks to be heading towards 30, while the MACD is below both its zero and trigger lines, pointing south as well. These indicators detect negative momentum and corroborate our view for some further declines, at least in the short run.
On the upside, even if the pair rebounds back above 1.5010, it would still be trading below the aforementioned downside resistance line. Thus, we would treat such a recovery as a corrective move as the bears may still be able to take the reins from near the 1.5055 zone, or the downside line. We prefer to wait for a decisive break above 1.5115 before we start examining whether the sellers have abandoned the action. Such a move could confirm the break above the downside line and may initially aim for the 1.5185 hurdle, the break of which is likely to allow extensions towards the high of January 23rd, at around 1.5225.
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