GBPCAD Base Building?
GBPCAD is one pair I’m monitoringwith interest currently. The market has been trading lower over the year,tracing an orderly bearish channel from the roughly 1.65 highs down to themid-1.53 lows. However, over the recent declines we’ve seen strong bullishdivergence on momentum studies, suggesting potential for a reversal in thenear-term. Price has recently been stalled along support at the 1.5354 leveland has attempted to breakout above the channel top. While 1.5354 holds, the pairlooks to be establishing a base, putting the focus on a breakout higher. Bullscan look to trade a break of the 1.5744 highs targeting 1.6109. Worth notingthat the retail market is currently 85% long GBPCAD, suggesting that theremight yet be more range-like trading before any reversal higher, including potentialfor a further test of support. The risk here is obviously that the longer-term downtrend continues and we simply breakdown through lows, in which case I will reassess.
Keep An Eye On
Canadian and UK CPI will be closelywatched this week. On the back of US CPI moderating in July, traders are keento see if this marks the start of a trend to be seen elsewhere. With both theBOC and BOE firmly committed to tightening, this week’s inflation will be key.If either reading is seen undershooting expectations this will likely weigh onrate-hike projections, pulling the respective currency lower against the other.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.