GBP/CAD can’t seem to make new lows below a key technical support!
Will this lead to the pair extending its 2024 uptrend?
Today’s 4-hour chart may give us more clues!
GBP/CAD 4-hour Forex Chart by TradingView
In case you missed it, the British pound took hits after the Bank of England (BOE) gave us a “dovish hold” where two voting members who previously voted to raise interest rates now favor keeping interest rates at 5.25%.
Meanwhile, sticky high Canadian inflation and a bout of risk-taking took commodity-related currencies like CAD higher than their major counterparts.
Will the tides change again for GBP/CAD?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the British pound and the Canadian dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
GBP/CAD’s downswing seems to have lost momentum around the 1.7130 area, which is right smack at the S2 Pivot Point line. In this case, the S2 support also lines up with the 4-hour chart’s 200 SMA support.
More importantly, though, GBP/CAD’s downswing stopped juuuust above an ascending channel support that hasn’t been broken since the start of the year.
Are we looking at a trend continuation opportunity? Watch out for bullish candlesticks at S2, which could draw in more GBP bulls and extend GBP/CAD’s 2024 uptrend.
A move to the 1.7250 mid-channel resistance may be in the works if the pair starts to see a bullish momentum. We could even see the pair hit its previous highs near 1.7350 if the technical bounce higher is fueled by a fundamental catalyst!
We wouldn’t rule out an extended downswing for GBP/CAD, however. If traders continue to price in Canada’s relatively strong data releases, or if the CAD-related oil prices shoot up again, then GBP/CAD may extend its downswing.
Look out for clear and consistent trading below the S2 support, which opens up a possible breakout below the channel pattern that we’ve identified.
Good luck and good trading this one!