UPDATE – GBPCAD: Trendline Being Tested, Possible Entry Ahead

Background:

• On 6th May I published fully annotated charts and analysis of GBPCAD, including my personal trade plan.
• See the original charts, analysis and trade plan HERE > https://charlesclifton.co.uk/gbpcad-gbp-tanks-post-boe-eyes-1-5300/

Since publication, GBPCAD has:

• Reclaimed the 1.5900 handle
• Has come and gone from my Forex Strength Vs Weakness Tables – Link to Live Tables HERE
• Continued to rally to bear Trendline resistance
• Is currently testing the downtrend

Current Narrative:

• The current narrative remains to the downside
  • Price has consistently set lower highs
  • These lower highs have been constrained within a bear trendline
  • GBP remains overall pressured, particularly in light of further forthcoming UK/EU Trade Deal negotiations
  • CAD remains buoyant, given the international market price of Oil holding circa $115 a barrel
• Price did find a floor/support at the 1.5800 handle, below which we see a prior rising but as yet untested trendline, anchored May ’10 and formed Oct ’16
• ADX: 8 Hour ADX(W) shows buyers and sellers converging with sellers remaing in control and a strong (25+) trend strength
• Stochastic: Sto shows (I believe) short term buying strength indicative of a retracement rally

My Call:

• As stated in my original post, should a retracement to trend occur I will/have now applied a bearish Fibonacci 
  • A slight upside breach of the Fib 62% retracement level gave clear contact with the bear trendline
• Having taken partial profit from the last short-side leg I will be adding to my remaining short position:
  • At the US session open (1pm BST (UK))
  • On the open of the new 8 Hour bar
  • Below the 50% retracement level
• Ultimately I am targeting the original 1.5300 zone, but as ever I’m happy to take partial profits along the way, such as:
  • At the 1.5800 prior support handle
  • Shortly before contact with afore mentioned rising (untested) trendline, circa 1.5700
  • And on contact with the existing bear trend channel support, circa 1.5500
• Obviously, should the above conditions not be met (i.e. the trendline test fails and we see an upside breakout) then I will not add to/enter a new position

Strength Vs Weakness / Caveat:

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