It’s a battle of which set of nations will be first to put their differences aside, as this neat reversal pattern on GBP/CAD caught my eye! Think we’ll see confirmation or rejection right here?
Long GBP/CAD Idea
On the pair’s 4-hour time frame, I’m seeing a double bottom reversal formation, with price already testing the neckline around the 1.6850 minor psychological mark.
This chart pattern spans around 250 pips in height, so the resulting rally could be of the same size. However, stochastic is already approaching overbought levels, which suggests that buyers could take a break soon.
All this could hinge on the progress in trade talks, though, as traders are expecting to get major updates on NAFTA and Brexit this Friday.
You see, the U.S. and Mexico already struck a trade deal early this week and are hoping to get Canada on board before the end of the week. Meanwhile, EU chief negotiator Barnier just recently announced that they’re willing to customize a deal just for the U.K. and will be meeting with Brexit minister Raab also on Friday.
Now I’m a bit more bullish on the British pound in this case since the EU deal concession is relatively unexpected and unprecedented compared to a NAFTA accord. To put it another way, with market expectations running high for a trilateral deal between the U.S., Mexico, and Canada, a bearish Loonie reaction might be more drastic in case they disappoint.
In case you’re wondering, I haven’t set any actual entry orders yet since I’m hoping to get confirmation first. To be specific, I’m looking to go long on a quick pullback after an upside breakout happens.
If I’m able to get in around the 1.6850-1.6875 area, I’ll set my stop below the neckline and 1.6800 mark. From there, I’ll aim for a 250-pip profit target but be ready to close out if talks are left open-ended until the weekend. That’s me minding the gap!
What do you guys think?
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