This break of channel resistance has been a long time coming for GBPCAD. The pair first began its descent in late February from its seven-year high at 1.9550.
For the past two months the pair has carved out a descending channel that is best seen on the 4 hour chart.
The catalyst that triggered the final push higher was trend line support from August of 2013. Shortly after coming into this level the pair found the buyers necessary to break channel resistance.
From here we can watch for an opportunity to buy on a rotation back to the 1.8390 area which should now act as support. Resistance levels to keep an eye on for next week include the 1.8675 level as well as the 1.8825 key handle.
Given the fact that the weekend is almost upon us, I prefer waiting until next week before looking for an entry. This will not only keep us free from any unexpected weekend news but will also help to solidify the break by giving us a daily and weekly close above former resistance.
Note: This setup is contingent on the market closing the week above channel resistance.
Summary: Watch for bullish price action on a retest of the 1.8390 area as new support. Key resistance comes in at 1.8675 and 1.8825.