The EUR/CAD started its 2018 decline on March 20th. and bottomed out on 20th February this year creating a multi-year bullish reversal Falling Wedge pattern (A). A strong breakout occurred on the 27th later that month at the 1.46549 handle and from there continued to gain traction until the 19th of March where it topped out at 1.59936.
Over the past 4 months the EUR/CAD cross has created yet another bullish pattern, this time a Cup ‘n’ Handle bullish continuation pattern, with the handle doubling as a Falling Wedge pattern. Popular Indicators such as the RSI and the MACD are fairly neutral, skewed slightly to the bearish side, and daily moving averages are pretty much flat with a slight bullish bias.
The fundamental picture for this pair (more so for the EURO) is looking rather bearish, depending on how you interpret the data. Small speculators have become very optimistic about further gains, which usually doesn’t end well for them. According to last weeks Commitment of Traders (COT) Euro positions fell for the current week following increases in the past six weeks that had driven the overall position to an untouched record high. The current week's small decline leaves the current bullish position (+196,943 contracts) near the +200,000 net contract level which is just a few contracts above last week's record high.
Smart Money Hedgers (Commercials) are doing what they usually do, taking the opposite side to the small speculators locking in prices as they decline. They are currently holding -259,364 contracts on the EURO which hasn’t been seen in decades making it an extreme. When the Smart Money has this type of extreme exposure, they tend to drive the market. That being said it can and usually takes a matter of weeks before this happens.
Over the past 4 months the EUR/CAD cross has created yet another bullish pattern, this time a Cup ‘n’ Handle bullish continuation pattern, with the handle doubling as a Falling Wedge pattern. Popular Indicators such as the RSI and the MACD are fairly neutral, skewed slightly to the bearish side, and daily moving averages are pretty much flat with a slight bullish bias.
The fundamental picture for this pair (more so for the EURO) is looking rather bearish, depending on how you interpret the data. Small speculators have become very optimistic about further gains, which usually doesn’t end well for them. According to last weeks Commitment of Traders (COT) Euro positions fell for the current week following increases in the past six weeks that had driven the overall position to an untouched record high. The current week's small decline leaves the current bullish position (+196,943 contracts) near the +200,000 net contract level which is just a few contracts above last week's record high.
Smart Money Hedgers (Commercials) are doing what they usually do, taking the opposite side to the small speculators locking in prices as they decline. They are currently holding -259,364 contracts on the EURO which hasn’t been seen in decades making it an extreme. When the Smart Money has this type of extreme exposure, they tend to drive the market. That being said it can and usually takes a matter of weeks before this happens.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.