The GBP / CAD pair traded lower yesterday, but the decline was halted near the 1.7200 barrier, which is also the lower end of the lateral range that has been in place since March 27.e. The rate then rebounded, with the recovery remaining limited near the 1.7310 level. Although the pair continues to trade near the lower end of the range, we would like to see a decisive break below this limit before we start looking at further bearish extensions.
If, indeed, the bears manage to exceed the 1.7200 zone, we could see them aiming for the lowest of March 27e, around 1.7065. The rate could rebound somewhat after testing this area, but if it fails to pass the 1.7200 area, the bears may return to the game and push for another leg down. If they manage to cross the 1.7065 mark this time, we will see them dive towards the 1.6915 area, marked by a low intraday swing swing formed on March 26.e.
By drawing attention to our oscillators, we see that the RSI is operating below 50, while the MACD is below its zero and its trigger lines. Both indicators detect negative momentum, but the RSI appears to have slightly crossed its 30 line, suggesting that a small bounce might be on the cards before the bears decide to regain control, perhaps so that the rate tests the level of 1.7370, defined as resistance by the low inside swing on Wednesday.
That said, however, in order to begin to examine whether traders want to maintain this range of exchange rates for some time, we would like to see a clear recovery above 1.7370. Bulls could take orders temporarily and aim for yesterday’s high, near the 1.7500 psychological zone. A further break above 1.7500 could extend Monday’s advance to 1.7625 or the upper end of the range to around 1.7700.
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