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Can the British pound move higher against the Canadian dollar?
If so, how high could it go?
Watch the video below to see what I think.
Don’t forget to scroll down for more commentary and an annotated chart.
From a technical standpoint, GBPCAD has been perfect, at least so far.
I pointed out this inverse head and shoulders back on September 9.
I also discussed the pair on September 12, less than 24 hours before we got the massive 330 pip rally on the 13th.
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The pair even sold off recently from 1.6600, which is an area we’ve been talking about for weeks.
As you can see, this was one of those cases where the market took two weeks to retest the head and shoulders neckline as new support.
And if you watched Saturday’s forecast video, this week’s bounce from the 1.6250 support area shouldn’t be surprising.
That’s the location of former neckline resistance (new support).
There is also a channel in play that could help push GBPCAD higher, perhaps much higher.
Be sure to watch the video above to see what that pattern is and why it matters.
As long as GBPCAD stays above that 1.6230 support region, the bullish potential is intact.
That does not mean the pair will move higher.
I talk about the fact that there are no guarantees in this business a lot, but for good reason.
If buyers can force a move above recent highs around 1.6330, we could see the pair retest 1.6430 as resistance.
Get above that on a daily closing basis and it would open the door to 1.6600.
Keep in mind too that the measured objective for this inverse head and shoulders pattern is around 1.6800.
That’s a very real possibility if buyers can get behind GBPCAD.
In fact, I think a run at 1.6960 isn’t out of the question if the pair can climb back above 1.6600, which is where it failed in September.
Alternatively, a close below the neckline near 1.6230 would negate the bullish outlook and expose 1.5980.