Last week I mentioned the confluence of resistance on GBPCAD near the 1.6600 handle. However, shortly after its release, the pair rallied to close the day and eventually the week above the key area.
The trade idea, which called for a break of support, never materialized which meant a position wasn’t warranted.
Flash forward to today, and we can see that the pair has closed Monday’s session back below 1.6600. At the moment this makes last Thursday’s close appear as a false break.
While this may be true, the pair still has some work to do before we can call it a confirmed setup. Namely, we need to see a 4-hour (or daily) close below channel support.
The long-term objective for the pair as initially established on June 1st remains 1.5300.
I’ve hinted at it a few times over the last few days, but I’m on the sidelines until the upcoming US election is behind us. The gaps and false breaks of late are a signal that staying in cash is the best position to have in my opinion.
For now, I’ll keep GBPCAD on my watchlist to see if something favorable develops in the coming sessions.
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