Morning Market Update – GBP/CAD

GBPCAD rally is still in progress and edges higher to 1.6658. Intraday bias remains on the upside at this point. A firm break of 1.6658 resistance will confirm the resumption of whole rebound from 1.6598 bottom. In such case, the pair would target projection of 1.6755. On the downside, below 1.6598 minor support will turn intraday bias neutral first. But near term outlook will stay cautiously bullish as long as the 1.6658 support holds.

Looking at the bigger picture, current development suggests that rebound from 1.6598 is developing into a medium term rise. There is no confirmation of trend reversal yet and we’ll continue to treat such rebound as a corrective pattern. But in any case, further rise is now expected and a break of resistance is needed to confirm completion of the rebound. A further rise is now in favor.

The recent run higher on the Sterling has been incredible. A huge accelerating bull run has seen the market burst through the key 1.6598 to now see what looks to be a huge breakout above the resistance. The market has been limited by the resistance band 1.6658 on numerous occasions in the past session but the weakness of the Canadian has driven a breakout.

Chasing the Sterling higher here would though be a move filled with significant reward. The Momentum is clearly strong but is also incredibly stretched. Staying with the bull-run may be profitable in the very near term, however if profit taking hits, it could be a sharp reversal. Watch for exhaustion signals. The bulls were looking tired before the sharp gains of today, but again the move looks stretched and a close back inside the resistance would now be a corrective signal.

The GBP/CAD pair traded with strong positivity after completing forming the support that appears on the four hour chart, which pushes the price to test correction level at 1.6755 again, and we need to monitor the price behavior when reaching the mentioned level, as breaching it will extend the correctional bullish wave on the short term basis.

Therefore, the bullish trend will be expected for today supported by the EMA50, taking into consideration that breaking 1.6658 will continue the current bullish rally and push the price to return to the main bullish trend again.

Expected trading range for today is between the 1.6598 support and the 1.6755 resistance.

Expected trend for today: Bullish
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