Possible H&S on GBP/CAD with Neckline at 1.7160

The Great Britain pound versus the Canadian dollar currency pair seems to have a head and shoulders chart pattern coming in its way.

Long-term perspective
After starting the ascending movement from the support area of 1.5936, the price extended all the way to the resistance level of 1.7811.
From 1.7811, a strong fall took place, one that was tempered by 1.6986, from where another appreciation commenced and confirmed 1.7499 as resistance.
The retracement from 1.7499, alongside with the peak of 1.7305, could end up by forming a head and shoulders chart pattern, with 1.7160 as the neckline.
Even if a second shoulder does not materialize, the fact that the price retraced so drastically from 1.7499 points to bearish dominance.
As a consequence, any appreciation, as long as it does not take out the peak of 0.7305, might be seen for the bears as a fresh opportunity to join the market from better prices.
After the price confirms 1.7160 as resistance, the next target sits at 1.6986. But if this attempt fails and 1.7160 is only falsely pierced, thus being confirmed as support, the situation may turn neutral.

Short-term perspective
The depreciation that started after the confirmation of 1.7481 as resistance stopped at the same level that the appreciation that climbed at 1.7481 began from, respectively 1.7130.
So, as the price revolves around this level, chances are that, for a while, it will still be very important, at least until a direction appears under the radar.
On the other hand, the fact that the price oscillates within a structure that has convergent support and resistance lines leads to the idea that the downward movement could continue. This is because such structures yield the continuation of what precedes them, and because this one is preceded by a depreciation, the expectations are that what will unfold is destined to be a fall.
As a result, 1.7110 is the first target, followed by 1.6959. Only if the bulls manage to confirm 1.7288 as support, 1.7383 may serve as a profit booking area.

Levels to keep an eye on:

D1: 1.7160 1.6986
H4: 1.7130 1.6959 1.7288 1.7383

If you have any questions, comments, or opinions regarding the Technical Analysis, feel free to post them using the commentary form below.

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