This pair has been cruising higher with rising highs and lows inside an ascending channel.
Will it bounce from support or make a break lower this time?
Check out these inflection points on the 4-hour time frame!
GBP/CAD 4-hour Forex Chart by TradingView
Stronger than expected Canadian CPI released earlier this week sparked a run higher for the Loonie, as the numbers appeared to dampen dovish BOC expectations.
After that, the U.K. inflation report came in below estimates and likely convinced pound bears that another BOE rate cut may be in the cards.
With that, GBP/CAD slumped to the very bottom of its ascending channel right around S1 (1.8670). Can buyers continue to defend the floor?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the Canadian dollar and the British pound, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
The 100 SMA is still above the 200 SMA on this time frame, suggesting that support is more likely to hold than to break. However, the pair has also fallen below both indicators, which means that these could hold as dynamic resistance levels on a bounce.
Sustained upside momentum could take GBP/CAD back up to the pivot point level (1.8790) near the mid-channel area of interest or all the way to the channel resistance around the 1.8900 major psychological mark.
On the flip side, look out for long red candlesticks reflecting a continuation of downside pressure, possibly dragging price down to the next bearish target at S2 (1.8510) or lower.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment.
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
