- GBP/CAD bulls looking for hourly support to hold and resistance to break.
- Bulls can target a 38.2% Fibo of the weekly bearish run and 4-hour resistance first.
GBP/CAD is stalling on the downside.
There are prospects for a significant correction within the current monthly bearish candle and three consecutive weeks of bearish closes.
The following is a top-down analysis that has something for both day traders and swing traders targeting a bullish correction.
Bulls can target a 38.2% Fibonacci retracement of the current monthly bearish impulse.
The weekly perspective offers a clearer structure that illustrates the price stalling at a familiar support level.
By comparing the daily and weekly charts, we can see a slight confluence of the 61.8% Fibo on the daily chart to the weekly 38.2% Fibo which meet old support that would be expected to act as resistance.
This reinforces the upside target area between 1.7465/85 from a swing trading perspective.
Meanwhile, however, the conditions remain bearish on the 4-hour chart, so bulls would be prudent to wait for a shift of the environment.
What is even more compelling is the possibility of a bullish reverse head and shoulders pattern.
If the price moves to resistance and subsequently stalls, there are prospects of the right-hand shoulder (RHS) forming.
Meanwhile, there is a day trading opportunity in the making should the price hold at support and break into test the recent highs and resistance structure.
A break of which will open prospects of a 1:2 risk to reward ratio with a stop loss below the latest lows/support structure and in targeting the 4-hour resistance:
However, the environment is still bearish with the price below the 21 and 8 SMAs and Momentum in negative territory.
IF the price does hold support AND subsequently breaks resistance, Momentum will shift to positive and there will be a bullish crossover between the 8 and 21 SMAs that would be expected to draw the bid towards 4-hour resistance.
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