EUR/CAD – Stick to Trading a Solid Range: Best Trading Opportunities

‘When life gives you lemons, make lemonade’

Many traders look for breakouts and sharp moves to boost their P&L, and in many cases they make a big hit of it. However, trading set ranges can potentially provide more of an opportunity when looking at different assets, and when you have strong support and resistance levels your chances of trading profitably can actually increase as you may have the ability to buy and sell your asset as it hits both support and resistance. When range trading, you also know when not to trade, especially if the price action is concentrated around the center of the range. Sometimes when there is unexpected news on an asset class, traders may jump on the trade, but if that asset is in the middle of a trading range, it may be prudent to see if support or resistance is tested before making a trading decision.

EUR/CAD daily price chart

Chart via ProReal Time

One pair that appears to have established a strong trading range over the past two and a half months is EUR/CAD. Support and resistance have been repeatedly tested and held since the range formed with reactions from these levels is also reasonably fast. Support and resistance levels can be used by traders to help set invalidation levels with the four point trading range allowing for a slightly more flexible approach when setting stop losses. The Canadian Dollar and Euro are likely to be volatile over the next few months as both sides seek to redefine monetary policy to fight inflation, which could provide new opportunities to test the current range.

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