Never miss a story from Kaye Lee

Subscribe to recieve updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from Daily FX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to Kaye Lee

You can manage you subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

Talking Points:

  • Pullback in Daily GBP/CAD Uptrend
  • Flat Consolidation Pattern on 4-Hour Chart
  • Awaiting Long Signals on Hourly Chart

After a challenging week thus far, select currency pairs are offering set-ups in this choppy market. For example, GBPCAD appears to be pulling back within a daily uptrend and may present a reasonable basis for initiating new long positions.

The daily chart below shows that GBPCAD is just reaching a rising line of support, which may well provide at least a reaction, if not a continuation of the overall uptrend. Nonetheless, lower time frames will have to be analyzed in order to identify support more specifically.

Guest Commentary: Pullback in Overall GBP/CAD Uptrend

A pullback within the overall GBP/CAD daily uptrend may form the basis for initiating new long positions on lesser time frames.

On the four-hour chart below, GBPCAD is potentially creating a flat consolidation after a recent five-wave move up. Elliott wave novices are probably more familiar with the "zig-zag" pattern, but given how price has neatly created two nearly identical highs, there is a significant probability of a flat consolidation developing here instead.

Guest Commentary: Flat Consolidation Pattern in GBP/CAD

An Elliott wave pattern corresponding with previous support on the 4-hour chart of GBP/CAD provides a key zone for initiating new long positions.

With that in mind, a support zone has been identified at “c” as 1.8301-1.8392. This represents a risk zone of 91 pips, which is sizable, but still acceptable for pairs involving the British pound (GBP). However, in order to reduce risk exposure on this trade, the hourly chart (see below) is the desired trigger time frame.

The hourly chart shows more promise for this trade as it develops into what is admittedly a rather broad ending diagonal pattern. There have been four waves to this move already, and the fifth is now developing.

The key support zone has already been contacted, albeit only briefly, but nonetheless, a pin bar or bullish engulfing pattern, or bullish reversal divergence, which is likely to develop at the top of the hour with many indicators, would signal a viable long-entry opportunity. The usual advice about taking perhaps two or three tries at a potential entry applies here as well.

Guest Commentary: Awaiting Long Signals in GBP/CAD

With GBP/CAD having already touched the key support zone on the hourly chart, one of three triggers will signal viable long-entry opportunities in the pair.

GBPCAD could move in excess of 200 pips to the upside, although admittedly, the overall risk profile is not quite ideal. Then again, this trading environment is far from ideal, but as we’ve said, the best response to such trying market conditions is to continue to take trades, albeit cautiously and in strict accordance with one's own proven trading plan.

By Kaye Lee, private fund trader and head trader consultant,