Hi Traders! GBPCAD short term forecast update and follow up is here. On November 1st I shared this “GBPCAD Technical Analysis And Short Term Forecast” 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 H1 chart, we could see that the price which was moving higher has created a bearish divergence between the first high that has formed at 1.57867 and the second high that has formed at 1.58131 based on the MACD indicator. The price then moved lower and broke below the last low at 1.56451 creating lower lows, thus forming a classical setup of bearish divergence followed by bearish convergence, we may consider these as evidences of bearish pressure. Generally, after a bearish convergence we may look for corrections and then further continuation lower. In addition to this, the ADX indicator gave a bearish signal here as well at the cross of -DI (red line) versus +DI (green line) and the main signal line (silver line) reads value over 25 which we may consider as yet another evidence of bearish pressure. Until the strong resistance zone (marked in red) shown in the image below holds my short term view remains bearish here and I expect the price to move lower further after pullbacks.
GBPCAD H1(1 Hour) Chart Current Scenario
Based on the above-mentioned analysis, on the H1 chart, my short term view was bearish and I was expecting the price to move lower further until the strong resistance zone holds. The price action followed my analysis exactly as I expected it to here. After the bearish convergence, the pullback that I was looking for happened with the price creating a false break of the last high at 1.56537 and then it moved lower and broke below the last low at 1.56069. We may consider these as facts provided by the market supporting the bearish view. The price then moved lower further and delivered 520+ pips move to downside until it was blocked by a bullish divergence.
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 bearish 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 accordingly.
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Happy Trading!
Arvinth Akash
Traders Academy Club Team.
