GBP/CAD Price Analysis: Choppy conditions at counter trendline resistance
- GBP/CAD is being rejected at monthly resistance which opens the case for the downside.
- Bears can be enthused by the restest at the counter trendline resistance but 4-hour chart price action is dubious.
GBP/CAD has failed to break out of from the reverse head and shoulders on the monthly chart and is rejected at a strong level of supply.
The price is making signs for a breakout to the downside on both the weekly and daily chart but there is less conviction on the lower time frame.
The following chart is a topdown analysis that illustrates the downside bias.
Monthly chart
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The price failed to break the resistance once again which is invalidating the reverse head and shoulders.
Weekly chart
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The weekly chart shows that there are prospects of a move above the trendline to the prior structure.
Weekly chart 38.2% Fib confluence
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However, there are many confluence of the 38.2%, the counter trendline and prior near-term structure.
Daily chart
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The daily chart has already offered a number of confirmations that the counter trendline and confluence resistance structure is solid on the restest in what appears to be the formation of wave-3.
4-hour chart reverse head and shoulders risk
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The 4-hour chart is, however, seeing the price test back above the 21 moving average.
The risk here is a formation of the reverse head and shoulders and a break to the upside above structure in choppy conditions.
The price action from here should be monitored for a test of the recent lows. A break and restest could offer prospects of a bearish setup with a lower target.
Author
Ross J Burland
FXStreet
Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.
