GBPCAD: GBP Tanks Post BoE – Eyes 1.5300 ?

GBP/CAD – Charts & Analysis

As of writing: Strength Vs Weakness Tables Standings

• GBP is showing W2 (Weak) and W1 on the Trend and Day trading tables respectively
• CAD is showing S2 and S3 (Strong) on the Trend and Day trading tables respectively

Link to LIVE/Rolling Strong/Weak Tables HERE

Observations:

• The chart above shows GBPCAD residing in a long term range: Est Oct ’16: 1.59 base, 1.78 top
• Within we see a minor range: Est June ’20: 1.68 base, 1.78 top
• Upon 1.68 breakdown we see a decisive move south the 1.59 major range support handle
• ADX: ADX is seen showing strong seller control and a strong underlying trend to the downside
• Stochastics: Seen remaining in oversold territory

Observations:

• The chart above shows a confirmed bearish trend/channel, anchored Feb ’22, confirmed April ’22
• The anchor point of this trend is a test of a longer standing down trend, anchored Dec ’15, formed  Feb ’21, tested Sept ’21 and Feb ’22
• The bear channel is currently some 1,500 points (950 since the 1.68 breakdown) and is again testing 1.5900 major range support
• Below 1.59 lies an untested uptrend line, anchored May ’10, formed Oct ’16
• Below this lies significant historical support: March ’10 through April ’13, tested again in Oct ’16
• ADX: Again we see a very strong ADX reading clearly showing sellers in control, alongside a rising downside trend strength of 50+
• Stochastics:Here we see Sto re-entering oversold territory – a very good sign if you’re a seller !

Current Narrative:

• Cleary sellers have the upper hand here following yesterday’s BoE Rate hike whilst CAD continues to appreciate in light of the rising cost (increased demand/reduced supply) of oil
• With this in mind it is plausible that the 1.5900 support handle may give way
• Should this narrative play out the 1.5300 handle comes into focus
• Alternatively, the 1.5900 handle holds, for now at least

My Call:

• I have been short this pair post 1.6800 breakdown following the 1.6700 retracement rejection
• I have taken partial profit 50 points above contact with the 1.5900 support handle
• I will watch the week’s close, seeking a close below the 1.5900 handle
• I will seek to add to my position should Monday’s (09/05/22) EU session 8 Hour bar open below the Friday close, assuming that was also below 1.5900
• I am not too concerned about the afore mentioned untested rising support, although I am aware of it (and now you are too) so will be watching with interest.

Strength/Weakness Caveat:

• A removal of either of these currencies from my S/W Trading Tables (HERE) would of course negate this entire trade plan