eur/cad forming inverse Head & Shoulders for 350 pips target (16th September, 2022)

attached is the chart of eur/cad, daily & 4 hourly.

Rationale:

Technical View:

1. above is the daily eur/cad pair chart, forming the inverse head & shoulders with volume spikes on right shoulder confirming the higher chances of breakout upwards with RSI above moving average and above 60 indicating the momentum upwards & the pair to go up for at least 200 to 350 pips after the break of the pattern.
2. below is the 4 hourly chart of eur/cad which is forming & almost breaking the ascending triangle (pink lines) which is confirming the above case of inverse head & shoulders breaking upwards.

Fundamental View (Macroeconomics View) : 

1. BOC (Bank Of Canada) has been aggressively raising rates for months now & currently reside @ 3.25 & we are expecting that only one more 25bps hike & it will be pivot for BOC.
2. apart from that Canada housing market has been posting some of the worst data possible with not even a 1 new home sale in some months which is weighing on Canadian dollar.
3. on the other hand ECB is also raising rates aggressively now to curb the inflation at historic pace ever , currently @ 1.25 & they will be raising rates more aggressively in coming months with pivot of atleast 2.50 to 3 which is 125bps more from current rates.
4. so BOC will be restrictive in raising rates & ECB will be the aggressive one so rationale says to chase eur/cad instead of eur/usd or usd/cad directly. go for cross.

Plan : 

buy the pair, eur/cad between 1.31800-1.32000 for the target of 1.36200

Thank you,

Sanjay Galani, CMT, CFTe