I’m looking at this simple forex pullback setup on GBP/CAD but I’m not sure if I should enter at market.
As you can see from the 4-hour chart below, the pair recently broke below support at the 1.7900 major psychological level and dipped to the 1.7575 area. From there, price pulled back up to the broken support zone, which is around the 50% Fibonacci retracement level. So far, the area seems to be holding as resistance and GBP/CAD might resume its selloff back to the previous lows soon.
This might depend on the outcome of the U.K. manufacturing production report up for release at 10:30 am GMT today. After posting a 0.4% gain in September, the industry could show a mere 0.2% uptick in October, with a weaker than expected reading likely to result in a pound selloff.
There are no reports lined up from Canada today, although forex traders might still be reeling from the worse than expected Canadian jobs report released last Friday. No top-tier reports are due from Canada for the rest of the week so I’m thinking that the Loonie could take its cue from commodity prices and risk sentiment.
Data from the U.S. might also add support for the Canadian currency, as BOC Governor Poloz has emphasized that the pickup in their economy was partly spurred by strong demand from their North American neighbor.
I haven’t set any actual orders yet, as I’m thinking of either shorting at market if the U.K. manufacturing production report comes in weaker than expected or setting a sell order around the 1.7900 handle if price pops a bit higher during the London trading session. What do you think?
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