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CAD Outlook vs British Pound and New Zealand Dollar

CAD Outlook vs British Pound and New Zealand Dollar

2020-05-20 01:00:00
Dimitri Zabelin, Analyst
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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

Chart showing GBP/CAD

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

Chart showing NZD/CAD

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 @ZabelinDimitriTwitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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