The EUR vs CAD ended its sell-off which took this currency pair form its resistance area marked in light grey in the above H4 chart, down to its support area which is visible in light blue. The Bollinger Band indicator supported the sell-off as the upper band acted as a resistance level which prevented a rally. After the USDCAD reached its support area, price action was able to halt the sell-off and started to pierce above its support area as the Bollinger Band has entered a sideways trend.
The lower band of the Bollinger Band indicator is trading inside of the support area and the middle band as well as the upper band are trading above. Forex traders are likely to take the sideways trend as a good reason to realize floating trading profits and exit their short positions. The USDCAD is trading between the lower band the the middle band of the Bollinger Band indicator and a short-covering rally is expected to take price action above the middle band.
Forex traders are recommended to enter long positions at 1.4250 and below this level in order to take advantage from the expected short-covering rally. Conservative forex traders should wait for a breakout above the middle band of it Bollinger Band indicator before entering their long positions. A take profit target of 1.4900 has been set for a potential trading profit of 650 pips on the H4 Chart. More buy orders are expected after the EURCAD completes its breakout above the middle Bollinger Band.
Forex traders should protect this trade with a stop loss level at 1.4000 for a potential trading loss of 250 pips which will result in a Risk-Reward (RR) ratio of 2.60.
EURCAD
Long @ 1.4250
TP @ 1.4900
SL @ 1.4000
RR: 2.60
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