EUR/CAD : A Closer Look

• Now trading at 1.4693.
• 1.4713 is a critical level on the monthly chart. A close for Jan10 below here would be a very strong sell signal.
• When the 2002-2004 SHS (or triple) top broke its neckline, the downside run was good for at least 7 months and 20 big figures.
  
• The current SHS top started forming its LS in Mar08. RS trading has been extremely difficult, characterised by very large price overlaps (often 8-10 big figures) and abrupt changes in direction (often from 1 month to the very next). The neckline was finally broken in Dec09 and so, expect down move to continue to mid-year at least.
  
• One would hope that having broken the neckline and out of the RS congestion zone, the downside move should now be a relatively smooth one.
• In the most optimistic case, the SHS downside objective is 27 big figures away from NL 1.5308 ie around 1.2608.
• The immediately obvious downside target is the previous low at 1.3283.
• Have to keep reminding myself that proper trade sizing is still the single most critical factor in allowing one to see a trade through to its conclusion. Too large = fear when adverse reactions occur, and too small = not worthwhile trading + likely stupid pyramiding later on due to greed. Sensible balance !