- GBP/CAD is experiencing a sharp decline within an ascending channel.
- It is likely to continue lower as the countertrend reaction takes its course.
GBP/CAD is developing a bearish leg within an ascending channel. It will likely continue lower at least to the blue 100-day SMA at 1.7641.
The pair is in a short-term downtrend and given the principle that “the trend is your friend”, the odds favor a continuation of that trend.
GBP/CAD Daily Chart
The next bearish targets are at 1.7603 (September 4 low) and 1.7407 (August 8 low). In the most bearish scenario, the price could fall to the lower channel line at 1.7375.
GBP/CAD is in an uptrend on the medium and long-term time frames as it oscillates higher within an ascending channel. Therefore, there is a risk of an upside reversal unless the current sell-off ushers in a deeper downtrend. This is possible given its steep drop.
The Moving Average Convergence/Divergence (MACD) indicator has crossed below its signal line, providing additional evidence that prices are going to push lower.
The first signs of weakness appeared when the pair tested the upper channel line and formed a bearish shooting star candlestick reversal pattern on September 20 (orange rectangle in the chart above). It then consolidated for a while before starting to fall proper on Tuesday.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
