In yesterday’s intraday charts update, GBP/CAD was milling about at that there area of interest at 1.6080. And based on that, we had two scenarios in mind: (1) a trend continuation scenario wherein the pair respects the descending channel, or (2) an upside breakout with targets at 1.6340 and 1.6500. And if y’all can still recall, I also told y’all that it may be prudent to plan for both scenarios. Well, if ya took my advice, then give yo self a pat on the back ‘coz the pair has already made its way past 1.6340. Know what that means, dawg? That’s right! We bagged us 260+ pips in one day. Aww, yea!
Anyhow, the pair would now likely be gunning for 1.6500 next. However, stochastic is already indicating overbought conditions and all that. Also, sellers be strong at 1.6340. There’s therefore a chance that the pair may move back, likely back to the previous resistance at 1.6180. So if ya missed yesterday’s trading opportunity, then ya better get ready. Just know, though, that there’s a small chance that we’ll be getting a break-and-retest of the channel, which means that the pair could potentially pull back all the way to 1.6080. In that case, be extra careful ‘coz a strong break past 1.6080 means that bears be tryin’ to push the pair back into the channel.
Where is CAD/JPY headed to? Up? Down? Well, why not prepare for both? As y’all can see, there is a strong resistance area at 88.50 and an equally strong support area at 86.00. And as y’all can also see, price has also been recently trading steadily lower while trapped inside a descending channel. And presently, the pair is at the channel’s resistance area at 86.70, which happens to be an area of interest in the recent past. This gives us two major scenarios to consider.
The first is that the 86.70 acts as resistance and the pair continues to respect the channel. In that case, shorts would likely be gunning for 86.00 again. The moving averages seem to support this scenario since they’re in downtrend mode, with the 100 SMA acting as dynamic resistance to boot. Heck, if bearish momentum is strong enough, then we may even get double top pattern breakout. If that happens, then the pair may have enough bearish momentum for a 250-pip down move past 86.00.
The second scenario, meanwhile, is an upside channel breakout. If that scenario plays out, then the bulls will very likely have their sights on 87.50. Although 88.50 is also a possible target. Stochastic supports this scenario for now, since it is moving back up without reaching oversold territory, which could mean strong bullish interest. In any case, just make sure to practice proper risk management, a’ight?
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To get the complete picture and avoid getting blindsided by economic data, you also have to do your fundamental analysis. Lucky for us, Pip Diddy fills us in on what we need to know about fundamentals with his Daily Forex Fundamentals.