We had a great short trade on GBPCAD earlier in the year, playing the double top and channel break, and conditions look to be lining up for a fresh short. GBPCAD has recently settled into a block of consolidation following the breakdown below the 1.6551 level. With that area acting as resistance now, the market is turning lower, threatening a break of the 1.6293 level. Below here, bears can target a run down to deeper support at the 1.5899 level. With the retail market heavily long the pair and with both MACD and RSI bearish, there is plenty of scope for a fresh leg lower, particularly given recent BOC hawkishness and higher oil prices.
Keep An Eye On
Given the recent hawkishness from the BOC, which raised rates by .5% and signalled further hikes to come, CAD looks poised for further upside. Today’s CAD CPI release will therefore be closely watched. Should we see a beat on market estimates, this will no doubt drive CAD higher against GBP. Additionally, oil flows are key to watch. Crude has softened a little this week, though remains supported. Any fresh rally will add further pressure to GBPCAD, particularly given energy price concerns in the UK which are raising fears over growth.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
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.