Is a reversal looming in GBP/CAD?
|GBP/CAD tumbled on Monday, but hit support at the crossroads of the 1.7250 level and the upside support line drawn from the low of December 11th, and then, it rebounded. However, during the Asian trading today, the pair hit resistance at 1.7328 and pulled back. At the time of writing, it is testing the upside line again, where a break may signal a bearish reversal.
In our view, the break below the upside line would be confirmed upon a dip below yesterday’s low of 1.7250. This would also confirm a forthcoming lower low on the 4-hour chart and may initially pave the way towards the low of December 22nd, at 1.7200. If that zone is not able to halt the slide, then its break may carry larger bearish implications, perhaps setting the stage for the low of December 21st, at 1.7050.
Shifting attention to our short-term oscillators, we see that the RSI turned down after it tested its 50 level as a resistance, while the MACD, although fractionally positive, lies well below its trigger line and looks ready to enter negative waters. There is also negative divergence between both the indicators and the price action. All this suggests that the rate may start picking up downside momentum very soon, which increases the chances for a break below the aforementioned upside line.
In order to start examining the case of another positive wave, we would like to see a rebound back above 1.7328. This may signal that traders want to keep this pair above the upside line for a while longer, and may pull the trigger for the 1.7437 hurdle, marked by yesterday’s high. Another break, above 1.7437, may open the path towards the 1.7485 level, defined as a resistance by the peak of last Thursday.
JFDBANK.com - One-stop Multi-asset Experience for Trading and Investment Services
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.