GBP/CAD ? Bearish ABC Could Target 1.73 ?

February 6, 2018

2 min read

Dear Traders,

The GBP/CAD is hugging its moving averages while it is deciding the next short-term direction.

Potential setup opportunities exist and this analysis will take a closer look at them.

Bearish Bounce Looks Most Probable…

Price is showing a more complex correction since the last high, which could provide a trade setup soon.

Here is what we are looking for:

price broke below the 4 hour chart 21 EMA and is struggling to creep back above it.
A second 4 hour candle that closes bearishly below the 21 EMA could be the signal for a deeper correction down towards 1.73 at the very least.
If the high from Jan 25 is indeed the change point within a medium-term bullish correction (purple Y), then price could fall a lot further as part of a larger correction yet.
The GBP/CAD chart appears to closely mimic the GBP/USD on a short-term basis, only that it is lagging behind somewhat. One factor of concern is that the GBP/USD is soon approaching a potentially strong bullish bouncing spot, while the USD/CAD could bet setting up for further CAD weakness. If these two scenarios happen, the GBP/CAD will rise strongly too, thereby going against this setup. Caution is therefore advise.

All the best along your trading journey

Hubert