Daily Price Action

GBPCAD Ascending Channel to Offer Bears a Second Chance


Last month, I covered the GBPCAD break of the multi-year trend line that extends off the August 2013 low. This break was backed by a double/triple top that had formed between August of 2015 and January of 2016, which offered a 900-pip target at the time of my writing.

While the pair didn’t quite hit its objective at 1.8488, the setup was good for a total of 720 pips (530 pips if you exited on the close back above the 1.8840 handle).

But I have reason to believe that the recent push lower has not yet run its course. Aside from the fact that the pair is still trading below former trend line support with an unsatisfied measured objective, the price structure that has been developing since the first of the month suggests that the next leg lower is imminent.

The 4-hour chart below shows the ascending channel that has been in the works since the beginning of March. A close below channel support would open up the door for the next leg down and would reaffirm the idea that the double/triple top measured objective at 1.8488 will be met.

Another hint that supports the idea that further weakness lies ahead is the contrast between the angle of last month’s selloff and that of this month’s consolidation. More often than not, a corrective move is mild, if not downright sluggish, compared to the impulsive move that preceded it.

So far, the price action is staying true to form.

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GBPCAD ascending channel on the 4-hour chart

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