EUR/CAD traded higher on Thursday, breaking back above the 1.4600 level. The rebound came after the rate hit support near 1.4567 on Wednesday, but still remains below the prior upside support (now turned into resistance) line drawn from the low of October 30th. As long as the rate continues to trade below that line, we would see decent chances for the bears to jump back into the action and drive the rate back down.
They may decide to take charge again from near the aforementioned upside line, or the 1.4630 barrier, and perhaps drive the battle back below the 1.4600 zone. Such a move may target once again the 1.4567 hurdle, the break of which would confirm a forthcoming lower low and may allow the slide to continue towards the 1.4545 area, which provided decent support on November 5th, 7th and 8th.
Taking a look at our short-term oscillators, we see that the RSI rebounded from near its 30 line, while the MACD, although below both its zero and trigger lines, shows signs of bottoming. Both indicators detect negative momentum, but their rebound supports our view for some further recovery before the next negative leg.
We will abandon the bearish case only if we see the recovery extending above the upside line and the 1.4630 barrier. This may encourage the bulls to set the stage for the 1.4675 zone, where another break may allow them to put the 1.4710 zone on their radars. That zone is near the high of December 17th.
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