EUR/CAD looks set for a possible upside breakout in the subsequent few days.

Let’s take a better have a look at the pair’s Reverse Head and Shoulders pattern within the 4-hour timeframe:

EUR/CAD 4-hour Forex Chart by TradingView

In case you missed it, easing concerns over France’s government and better-than-expected German factory orders report helped boost the demand for the euro on Thursday.

The Canadian dollar, alternatively, is having trouble attracting sustained demand due to the decline of crude oil prices, dovish Bank of Canada (BOC) expectations, and uncertainty ahead of Canada’s labor market data release.

Keep in mind that directional biases and volatility conditions in market price are typically driven by fundamentals. In case you haven’t yet done your homework on the euro and Canadian dollar, then it’s time to ascertain out the economic calendar and stay updated on each day fundamental news!

EUR/CAD, which found support from the 1.4500 in late November, is hitting a ceiling across the 1.4850 area.

As you’ll be able to see, the resistance zone lines up with a serious support area from November. This month, the realm of interest is near the 4-hour chart’s 200 SMA and the R1 (1.4910) Pivot Point line.

Will the euro extend its gains against the Loonie?

We’re looking out for more bullish candlesticks, which could set EUR/CAD up for an upside breakout of a Reverse Head and Shoulders pattern. Consistent trading above 1.4900 may lead to a retest of the 1.5000 psychological handle and former highs near the R2 (1.5018) Pivot Point.

But what if 1.4900 holds as resistance again?

Bearish candlesticks and a transparent rejection from the inflection point may attract enough selling pressure to pull EUR/CAD to the Pivot Point (1.4750) zone if not the 1.4550 November lows.

As at all times, be careful for other top-tier catalysts that might impact overall market sentiment, and be sure you practice proper position sizing when taking any trades!