Canadian Dollar, British Pound, New Zealand Dollar, GBP/CAD, NZD/CAD – TALKING POINTS
- GBP/CAD may be bottoming out after false breakout led to over 3 percent decline
- Pair may challenge descending resistance again – what happens if it capitulates?
- NZD/CAD broke below uptrend, key inflection range – is a recovery in the works?
Canadian Dollar Outlook vs British Pound
GBP/CAD recently fell over 3.40 percent following a false breakout above descending resistance dating back to early-March. However, recent price action suggests the pair may be bottoming out at 1.7006 and could once again challenge the slope of depreciation. If the pair manages to clear it with follow-through, the next point of resistance could be a ceiling at 1.7276 (purple-dotted line).
GBP/CAD – Daily Chart
GBP/CAD chart created using TradingView
On the other hand, if bold price action becomes more timid as the pair approaches descending resistance and capitulation ensues, it could cast a bearish shadow on the pair. This may in turn catalyze an aggressive selloff and cause GBP/CAD to shatter several layers of support. In this scenario, selling pressure could start abating at 1.6851.
Canadian Dollar Forecast vs New Zealand Dollar
NZD/CAD recently broke below a multi-week slope of appreciation and a key inflection range between 0.8524 and 0.8499. However, the decline appears to have been short-lived with recent price action suggesting NZD/CAD may be readying to retest the previously-broken zone. Clearing it with follow-through could open the door to retesting the March-high at 0.8668 where the pair previously had stalled.
NZD/CAD – Daily Chart
NZD/CAD chart created using TradingView
Conversely, if buyers lose momentum prior to the inflection area, the force of sellers could send the pair crashing down and lead to a retest of the 0.8321-0.8298 support range. Shattering that multi-layered floor could leave the pair vulnerable to retesting the seven-year swing-low at 0.8170.
--- Written by Dimitri Zabelin, Currency Analyst for DailyFX.com
To contact Dimitri, use the comments section below or @ZabelinDimitri Twitter
