Technical Sentiment: Bullish
Key Takeaways
GBP/CAD was predominantly ranging all of last week, confirming a lower boundary at 1.7814 and the previous pivot resistance of 1.8100/25. The pair appears ready to jump even higher, toward 1.8230 and maybe up to 1.8320.
Technical Analysis
After a volatile sell-off, nearly 1000 pips in size from top to bottom, GBP/CAD is in the process of a steady recovery. Last week, despite several extremely volatile swings, price stayed put between two major levels:
1. A support level was defined at 1.7814, also marking a Higher Low within the recovery phase, indicating a preference for a bullish continuation.
2. Previous monthly support at 1.8100/25 became resistance throughout last week, strengthened by the 4h chart 200 Simple Moving Average and the 50% Fibonacci retracement level based on the top at 1.8665 down to 1.7537.
With the Canadian Dollar losing momentum against a basket of currencies, GBP/CAD is very likely to continue higher in the next trading sessions. Price is currently probing the resistance cluster yet again as the US trading session is about to begin, with the 4H – 200 SMA beginning to crack under buying pressure.
Free Reports:
A break above 1.8125 should trigger a rally up to 1.8215/30, where a huge cluster has formed around 100-Day SMA, 200-Day SMA and 61.8% Fibonacci retracement level. Considering Stochastic is entering overbought territory on Daily, a temporary top is likely to form once the resistance cluster is hit. If price overshoots, a secondary target lies at 1.8320.
Failure to break above 1.8125 will lead to further consolidation within the main range. Since GBP/CAD’s bias remains bullish, traders should only focus on buying near the support or after the resistance breaks.
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Prepared by Alex Z., Chief Currency Strategist at Capital Trust Markets
