GBP/CAD Nears Multiyear Range Resistance
THE GBP/CAD has been trading in a multiyear 1300 pip range. Price action is currently moving on resistance on our daily chart formed by connecting the October 2010 and Sept 2010 highs. Range traders will look to confirm a turn in price under resistance using oscillators to sell towards support.
Fundamentally both the GBP and CAD are seen as weak relative to other currencies. Our economic calendar this week brings up Canadian employment numbers and GBP PPI numbers. If we can see the economic outlook in Canada moderately improve relative to the UK we can look forward for this range to continue.
Taking Price in to an 8Hour chart we can clearly see resistance formed at 1.6385 from the August 19th high. Prices appear to be starting to turn lower, and our RSI indicator is being used for confirmation. RSI helps judge prices in terms of overbought and oversold variables. Range traders look for RSI to turn back below 70 (overbought) to trigger their sell orders.
My preference is to sell the GBP/CAD on a RSI crossover of our overbought levels on the 8Hour chart. Entrys should be set near 1.6230. Stops should be placed above resistance at 1.6420. At minimum, limits should seek 380 pips at 1.5850. Secondary targets may focus on our range support at 1.5260.
Alternative scenarios include price breaking out over range resistance.
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