EURCAD dipped below 1.4700


Canada’s retail sales improved 0.8% m/m in April after a downwardly revised 0.5% gain in March (was +0.7%), leaving a nearly as projected gain. But the ex-autos sales aggregate surged 1.5% m/m in April following a revised 0.1% dip in March (was -0.2%), which was well more than projections. Higher prices (notably at gasoline stations) played a large role in lifting the value of total and ex-autos retail sales. Total retail sales volumes were up a modest 0.3% m/m in April after the 1.1% jump in March. While the ex-autos sale aggregate came in on the firm side of projections, the gain in total sales alongside the more modest rise in sales volumes was roughly as expected. Hence, the report does not alter the outlook for April GDP, which we project will expand by 0.2%.

The Canadian dollar jumped following the strong Retail Sales report, against Euro, US dollar, Aussie and Yen. Therefore EURCAD dropped to below 1.4700 from 1.4895 this morning. In the 4 hour chart a crossing of the two MA line in the stochastic Oscillator was identified at approximately 89, while MA lines have a steep slope below overbought territory. Meanwhile Parabolic SAR turned the last two consecutive sessions, while the pair broke the 20-period MA and keeps moving south.

In the Daily chart, it seems that the asset is ready to create a Tweezer Top after that Strong Bullish Daily candle yesterday. If today EURCAD closes below yesterday’s close prices then this indicates that weakness is likely to continue in a Daily timeframe as well.

Therefore a Short position was just taken with entry at 1.4791. Target 1 is at 1.4720 based on ATR(14) in the 4-hour chart. Target 2 is at 50.0 Fibonacci level, i.e. 1.4660. Support was set at 1.4900.

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Andria Pichidi

Market Analyst


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