The GBP/CAD pair has been sailing above the uptrend line these days, and there appears to be another pullback to support.
Can the uptrend remain intact?
Let’s take a closer look at the area of interest we see on the 4-hour time frame!
GBP/CAD Forex 4 Hours Chart by TradingView
Crude oil prices have been on a tear again these days, lifting the pegged Canadian dollar and dragging the GBP/CAD pair down from highs around the 1.8100 area.
The pair has now fallen to the 50% Fibonacci retracement level just above the second support level (1.7890), but could still head towards a deeper decline to the uptrend line that has been holding for the past two months.
Will the support hold or break this time?
Remember that directional biases and volatility conditions in market prices are usually driven by fundamentals. If you haven’t done your homework on the British Pound and Canadian Dollar yet, it’s time to check the economic calendar and stay up to date with daily essential news!
The 61.8% Fibonacci level is closer to the trend line and previous resistance area, which also happens to coincide with the dynamic inflection point of the 200 SMA which adds to its strength as a floor. Additionally, the 100 SMA is higher than the 200 SMA indicating that the uptrend is more likely to resume rather than reverse.
However, a break down could drag GBP/CAD south to S4 (1.7770) and then S5 (1.7710) near the swing low, as another rise in crude oil could trigger a reversal for the pair.
Better keep an eye on the headlines of the OPEC-JMMC meeting to gauge the next direction for energy commodities and the oil-linked Canadian dollar.
Whatever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier market triggers when trading this. good luck!
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