EUR/CAD Daily Price Forecast – 9th January 2025

EUR/CAD Daily Price Forecast – 9th January 2025

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Trade Summary:

EURCAD
Buy Stop @ 1.48321
TP @ 1.48629
SL @ 1.47901

Technical Analysis of EUR/CAD (H4 Chart)

Overview

The chart represents a 4-hour timeframe for the EUR/CAD currency pair. The setup indicates a potential long trade with a Buy Stop at 1.48321, a Take Profit (TP) at 1.48629, and a Stop Loss (SL) at 1.47901. The analysis is based on price action, moving averages, and momentum indicators.

Key Observations

1. Trend Analysis

• Short-Term Trend: The price is currently trading below the 50-period Moving Average (red line) and the 20-period Moving Average (green line), indicating a short-term bearish trend. However, the price is consolidating near a key support level, suggesting a potential reversal.

• Long-Term Trend: The price is also below the 200-period Moving Average (blue line), confirming a broader bearish trend. A break above the 50-period MA could signal a shift in momentum.

2. Support and Resistance Levels

• Support:

  • The Stop Loss (1.47901) is placed below a strong support level, where the price has previously rejected lower levels.

  • This level aligns with a recent consolidation zone, providing a solid buffer for downside protection.

• Resistance:

  • The Take Profit (1.48629) is set near a previous resistance level, where the price has historically faced selling pressure.

  • This level is also close to the round number of 1.48600, which often acts as a psychological barrier.

3. Momentum Indicators

• The Momentum Power indicator shows a slightly negative value (-0.00026550), reflecting weak bearish momentum. However, the price is consolidating, and momentum is expected to shift as the price approaches the Buy Stop level.

• The chart notes that momentum confirms the trade, but it is waiting for candlestick confirmation to validate the entry.

4. Candlestick Patterns

• The recent candlesticks show indecision, with small-bodied candles and wicks near the support level. This indicates a potential buildup of buying pressure.

• A bullish breakout above the Buy Stop (1.48321) would confirm the trade setup and signal the start of an upward move.

5. Trade Setup

• Buy Stop at 1.48321: The entry point is slightly above the current price, ensuring confirmation of bullish momentum before entering the trade.

• Take Profit at 1.48629: The TP is set just below a key resistance level, providing a realistic and achievable target.

• Stop Loss at 1.47901: The SL is placed below the recent support level, offering a safe buffer against potential downside risks.

6. Risk-Reward Ratio

• The distance between the entry (1.48321) and the TP (1.48629) is 30.8 pips, while the distance between the entry and the SL (1.47901) is 42 pips.

• This results in a risk-reward ratio of approximately 1:0.73, which is slightly unfavorable. However, the trade relies on momentum and candlestick confirmation to justify the risk.

Conclusion

The EUR/CAD pair is showing signs of a potential short-term bullish reversal within a broader bearish trend. The trade setup is well-aligned with technical indicators, support/resistance levels, and momentum analysis. However, the slightly unfavorable risk-reward ratio suggests that traders should monitor the price action closely and consider adjusting the TP or SL levels if necessary.

Recommendation: Proceed with the trade setup but consider adjusting the Stop Loss or Take Profit levels to improve the risk-reward ratio if market conditions change.

Recommended Lot Size

Trading is all about statistics.

While we can experience winning streaks, we can also suffer from losing streaks.

As such, we should always size each trade to withstand losing streaks (if any).

It’s widely recommended that you should not risk more than 2% of your capital for each trade.

We believe it’s easier to control your lot size by limiting your lot sizing to 0.01 for every $500 in your account.

So if you have $5000, then risk no more than 0.10 lot size per trade.

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If you spot a mistake especially when it comes to the price, please use common sense and check the chart.

We wish you good luck and good profit for this trade idea.

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