GBP/CAD tumbled yesterday, falling below the Monday’s low of 1.7245, thereby confirming a lower low and signaling the continuation of the prevailing short-term downtrend, as marked by the downside line taken from the high of September 20th. The rate hit support near 1.7130, rebounded somewhat, but today, it resumed its slide, overcoming that barrier. All these technical signs paint a very negative picture, in our view.
The dip below 1.7130 may have opened the way towards the 1.7064 level, marked by the low of July 5th, or even the low of July 2nd, at 1.7024. If neither barrier is able to halt the fall, then the downtrend may get extended below the round figure of 1.7000, perhaps to test the 1.6950 zone, defined as a support by the low of April 30th.
Looking at our short-term oscillators, we see that the RSI slid back below its 30 level, while the MACD remains below both its zero and trigger lines, pointing down. Both indicators detect strong downside speed and enhance the notion that this exchange rate may continue its journey south.
In order to start examining a bullish reversal, we would like to see a rebound back above 1.7245, a barrier marked by Monday’s inside swing low. This will also take the pair above the aforementioned downside line taken from the high of September 20th and may encourage the bears to pull the trigger and shoot for Monday’s peak, at 1.7367. If they don’t stop there, we could see them aiming for the high of September 24th, at 1.7413, or the inside swing low of September 21st, at 1.7430.
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