On Monday I mentioned the break of channel resistance on GBPCAD. This was a level that had been in place since the August high and one that left little doubt that, if broken, was likely to trigger a rally that would test the 2015 high at 2.0970.
So far the pair has held its ground well, rallying for more than 300 pips from Monday’s close. And given the recent weakness in the Canadian dollar, I see no reason why GBPCAD won’t be revisiting the current 2015 high in the days and weeks ahead.
In fact, if we treat the price structure between August and December as a continuation pattern, we get a measured objective as high as 2.2500. Of course in order to reach such an ambitious target we would need to see this rally continue through most of 2016.
A look at the intraday chart shows a more actionable setup in the form of a bullish pin bar at the 2.0560 handle. This was a level of resistance that I mentioned in Monday’s commentary.
As you may well know, broken resistance becomes new support. This appears to be the case as yesterday’s session managed to close above the key handle by 46 pips.
My bullish bias will remain intact as long as the pair holds above 2.0560 on a closing basis. Key resistance comes in at 2.0970, which gives traders 360 pips to work with.