The Great Britain pound versus the Canadian dollar currency pair had not yet started the journey towards 1.7811. Is the price just gathering more energy for a new leap or is it just that there isn’t enough bullish optimism left?
After confirming 1.5936 as support, the price began an appreciation that extended until 1.7811. But touching that level was followed by a strong drop, one that was succeeded by equilibrium only above 1.6986.
Usually, after such strong movements, consolidation phases come. They are somewhat symmetrical and lead to the continuation of the movement that precedes them. In the context of our discussion, the consolidation phase is represented by the period that started on December 24, 2019.
But the market seems to be reluctant in following this path. Telling signs are, first of all, the lows and highs, as they appear to switch from a bearish configuration (lower highs and lower lows) to a bullish one — see the high on January 17, which almost sits at the same value as the highs of the candles that span from January 7 to January 10, and the low of January 20 which, with respect to the low of January 13, is a higher low.
Even more, on January 13, the price was under the support level, but it managed to recover. And this seems to happen once again, as today’s candle — as for 8:00 am GMT — trades above 1.6986.
So, all that it is now required is the spark that will put in a rally in motion. That can come either as a false break of 1.6986 or as an appreciation that takes out the high of January 17. In the case of the latter scenario, the conservative traders would wait for 1.7160 to be conquered. Irrespective of which situation does materialize, the main target remains 1.7811. Of course, for the very protective traders, 1.7499 level remains a good profit booking area.
Only if 1.6986 is confirmed as resistance, then 1.6620 may be paid a visit.
The price is contained is a sideways movement limited by the resistance of 1.7130 and the support of 1.6959, respectively.
As long as the support offers confirmations, the short-term target is 1.7130, which, once conquered by the bulls, will expose 1.7288.
On the other hand, if 1.6959 fails, then the way to 1.6684 is open. Until there, 1.6851 is an area where at least part of the profit is better to be parked, as it can facilitate a retracement that could bring the price above 1.6859 once again.
Levels to keep an eye on:
D1: 1.6986 1.7160 1.7811 1.7499 1.6620
H4: 1.6959 1.7130 1.7288 1.6684 1.6851
If you have any questions, comments, or opinions regarding the Technical Analysis, feel free to post them using the commentary form below.