GBPCAD has been trading higher for the last several weeks now. However, the pair is now coming closer to a major resistance level, as can be seen in the weekly chart below. The area highlighted has been a critical zone for the pair for several times. The RSI is also coming closer to the extreme levels on the weekly chart, which is a warning sign. So, I think we should be looking for sell opportunities.
Looking at the 4 hour chart of GBPCAD, there is a wedge forming, as shown below. Now, there are chances that the pair might spike higher, make a false break to the upside, and then trade lower again. If this happens, then we will enter into a sell trade once the pair retraces back below the broken wedge resistance level, as highlighted in the chart shown below.
Alternatively, the pair may move down, test the wedge support and then ultimately break the wedge, as shown in the chart below. If the pair breaks the wedge support and closes below it, then we will jump into a sell trade.
Initial target should be around the 1.7720 level, and final target could be around the 1.7620 level. Stop should be placed above the 1.8200 level.
Reviewing Friday’s events and trades
On Last Friday, the UK retail sales data registered a healthy gain, which helped the GBPUSD pair to gain some momentum. The pair jumped more than 80 pips in a matter of minutes after the release. Later during the US session, the US Housing, Building permits and Michigan consumer sentiment data were released. The outcome was mixed, and as a result the US dollar was unable to capitalize on the gains. The pairs like EURUSD consolidated after the data release. There was no major economic release for the US on Monday, and the market mostly traded in a range.
Fundamental Outlook for the day
Today we have a lot of economic data to be released for the Euro zone in the European session. The German ZEW economic sentiment, Spanish house price index and the Euro zone ZEW economic sentiment are lined up. The EURUSD is trading lower, and any better than expected data may help the EURUSD in the short term. Later during the US session, Canadian Wholesale and manufacturing sales data will be released. Other than this, in the next Asian session, the Australia’s inflation data will be released. I think the inflation data may play an important role for the Australian dollar considering the recent decline in the currency.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EURGBP, USDJPY, NZDUSD, AUDUSD, GOLD and EURUSD.
Get it HERE: Vladimir’s Markets Forecast
Trade safe friends. Happy trading!
