EUR/CAD has recently broken out of a multi-month price pattern, signaling a potential strong move higher in the future. The breakout occurred as the currency pair rallied and pierced above the slanting roof of the price pattern that had been in place since the beginning of August. This bullish sign, if followed through higher, could lead to a significant advance in the EUR/CAD pair.
On the daily chart, a break above the key level of 151.72, which was the November 1 high, could confirm a continuation higher towards initial targets at 152.28 and 153.12. The latter represents the 61.8% Fibonacci price projection of the height of the pattern at its widest part, from the breakout point higher. Additionally, the Moving Average Convergence Divergence (MACD) momentum indicator has risen above the zero line, further supporting the bullish outlook for EUR/CAD.
However, there is a potential bearish scenario to consider as well. A bearish close on a certain day might form a two-bar reversal pattern, which occurs after a rally when a long green up day is followed by a long red down day of a similar length. This pattern indicates a bearish short-term reversal, suggesting that a deeper correction could temporarily cloud the bullish outlook for EUR/CAD.
In conclusion, the recent breakout of EUR/CAD from a multi-month price pattern has set the stage for a potentially strong move higher in the currency pair. A break above key resistance levels could confirm a continuation of the uptrend, with initial targets at 152.28 and 153.12. While the MACD indicator is currently supportive of the bullish outlook, traders should be aware of the possibility of a bearish reversal pattern that might temporarily disrupt the upward momentum. Overall, the technical analysis of EUR/CAD suggests a bullish bias in the near term, pending confirmation of further upside moves.
