CADEUR finds buyers at key support level
Canadian Dollar/Euro (CADEUR) Technical Analysis Report for Oct 23, 2020 | by Techniquant Editorial Team
CADEUR ended the week -0.71% lower at 0.6424 after losing 17 pips (-0.26%) today. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (CADEUR as at Oct 23, 2020):
Friday's trading range has been 37 pips (0.57%), that's slightly above the last trading month's daily average range of 34 pips. Weekly volatility is also higher, being slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for CADEUR. Prices continued to consolidate within a tight trading range between 0.6408 and 0.6451 where it has been caught now for the last three trading days.
After trading down to 0.6414 earlier during the day, the pair bounced off the key technical support level at 0.6415 (S1). The failure to close below the support could increase that levels importance as support going forward. The market closed back below the 20-day moving average at 0.6430. The forex pair found buyers again today around 0.6414 for the third trading day in a row after having found demand at 0.6408 in the previous session and at 0.6412 two days ago. The last time this happened on October 7th, CADEUR gained 0.50% on the following trading day.
The currency shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
Selling might accelerate should prices move below the nearby swing low at 0.6408 where further sell stops could get activated. As prices are trading close to October's low at 0.6386, downside momentum might speed up should CAD/EUR mark new lows for the month.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bearish Bounce off SMA 100" stand out. While it is usually interpreted as bearish, it has actually shown to be bullish for CAD/EUR. Out of 43 times, CADEUR closed higher 60.47% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 60.47% with an average market move of 0.18%.