Published: October 6th, 2020
On the weekly chart GBP/CAD is going through the consolidation phase, with no clear direction. Although there was the break above the downtrend trendline which then acted as the support and has been rejected back on September 11. Following the rejection, the price went up and broke above the 50 Exponential Moving Average. On the most recent pullback, the pair rejected cleanly the 50 EMA as well as the 50% Fibonacci retracement level as per the weekly chart.
This shows bullish domination, as long as 1.7126 support is being respected. Price could potentially start rising towards the 1.7430 resistance area, which is confirmed by 38.2% Fibs. This level also corresponds to the downtrend trendline and could be tested within one or two weeks.
In September, GBP/CAD has cleanly rejected the 23.6% Fibs at 1.6900, which is an extremely strong psychological as well as technical level. Along with it, it has rejected the uptrend trendline and went up yet again. Right now, the price has corrected towards the 1.7138 support area, which previously acted as the resistance. It certainly could be a strong demand zone, because right now, the 200 EMA is being rejected.
Fibonacci retracement indicator was applied to the corrective wave down, where the pair rejected the 23.6% Fibs. It shows that the 227.2% retracement level almost exactly corresponds to the previously mentioned upside target near the 1.7430 area, making it a potential supply zone.
On September 11, GBP/CAD bounced off the upper trendline of the descending channel, which previously was broken already. On October 1, GBP/CAD cleanly rejected to the bottom of the descending channel, yet again bouncing off the support. And finally, during the past 3 trading days, the pair has been cleanly bouncing off the 200 Simple Moving Average, showing how strongly bulls are defending the 1.7100 support area. Perhaps now is the time when the uptrend continues and throughout this week there might be a strong price increase for GBP/CAD.
Currently, GBP/CAD is rejecting both, 50 and 200 Exponential Moving Average after earlier this week it bounced off the bottom of the ascending channel. The downtrend trendline has been broken yet again suggesting the validity of the uptrend.
On this chart, 2 new Fibonacci retracement indicators were applied, both of which are pointing out to the 1.7420 resistance area, which is very close to the previously discussed 1.7430-1.7440 resistance.
Today the uptrend has been rejected along with the 200 SMA on the hourly chart. Now there were at least two bounced off the 1.7135 Fibonacci support, suggesting an incoming upside wave. Fibonacci applied to the most recent pullback, shows that 261.8% Fibs corresponds to the 1.7430 resistance area, which makes a potential upside move over 250 pips. Obviously, this scenario can become the reality as long as daily close remains above the 1.7130 support area.
GBP/CAD consolidation phase could have come to an end. Considering the Fibonacci support and Moving Averages rejection on multiple timeframes, the trend is likely to start turning bullish throughout this week. The growth potential is expected to be between 250 and 300 pips.
As per all the charts and 5 different Fibonacci retracement levels, the key resistance area is seen between 1.7420 and 1.7440
A daily break and close below the 1.7046 will immediately invalidate the bullish forecast, in which case a long-term downtrend might begin.
Support: 1.7160, 1.7135, 1.7046
Resistance: 1.7247, 1.7278, 1.7420