Hi Traders! GBPCAD short term forecast update and follow up is here. On November 18th I shared this “GBPCAD Short Term Forecast And Technical Analysis” post in our blog. In this post, let’s do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Traders Academy Club. Spoiler alert – free memberships are available!
My Idea
On the H4 chart, we had a bullish divergence that has formed between the first low that has formed at 1.67339 and the second low that has formed at 1.67185 based on the MACD indicator. Then the price moved higher and broke above the last high at 1.69127 creating higher highs, thus forming a classical setup of bullish divergence followed by bullish convergence. Hence as per the book scenario, after a bullish convergence, we may look for corrections to happen and then further continuation to the upside. Currently it looks like a correction is happening. In addition to this, the ADX indicator gave a bullish signal here as well at the cross of +DI (green line) versus -DI (red line) and the main signal line (silver line) reads value over 25, we may consider this as yet another evidence of bullish pressure. Until the strong support zone (marked in green) shown in the image below holds, I expect the price to move higher further after pullbacks.
GBPCAD H4(4 Hours) Chart Current Scenario
On the H4 chart, based on the above-mentioned analysis my short-term view was bullish here and I was expecting the price to move higher further after pullback until the strong support zone holds. The price action followed my analysis exactly as I expected it to here. First we had a small pullback and then the price moved higher and delivered around 100 pips move until it was blocked by a bearish divergence. The price then moved lower and provided a deeper pullback with the price reaching the strong support zone. The price respected this support zone and then it moved higher further delivering 270+ pips move.
On the H1 chart, the market provided us with various facts supporting the bullish view. The price which was moving lower created a bullish divergence between the first low that has formed at 1.68625 and the second low that has formed at 1.68381 based on the MACD indicator. The price then moved higher and broke above the most recent downtrend line, we may consider these as facts provided by the market supporting the bullish view. Then as you can see in the image below how the price moved higher after that and provided an amazing move to the upside.
(Note: You can learn about a Killer Forex Strategy “Double Trend Line Principle” here)
So, traders, this is why I wanted to show this example to help you understand how important it is to follow the facts. The facts were supporting the bullish view here and there were no signs against it. When the facts do happen as we expected you can see how the price perfectly moved as per the plan. Because these are the kind of hints the market provides us at majority of the times and it’s our obligation as traders to be able to listen to these things that the market tells us and we should try to make the right actions.
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If you have any further questions, don’t hesitate to drop a comment below!
Happy Trading!
Arvinth Akash
Traders Academy Club Team.
