Exactly one week ago I mentioned the GBPCAD consolidation that appeared to be forming a descending channel on the intraday charts. What was unclear at the time was whether or not support would hold and thus give us a favorable pattern to work with.
The price action over the last 24 hours has confirmed my suspicion. The current price structure is indeed a descending channel that is best viewed on the 4-hour chart (below).
However, we can’t officially call this a bull flag pattern just yet, at least not by my standards. In order to confirm such a pattern and thus provide a breakout opportunity, we would need to see a 4-hour close above channel resistance – something that is far from realized at the moment.
This leaves us on the sidelines for now, waiting to see how the next few sessions play out.
What is perhaps more important than the potential setup is the lesson in patience that the last five trading days have provided. It’s a good reminder of how, given enough time, the market will always show its hand.
My longer-term bullish bias will remain intact as long as the pair trades above former channel resistance on a daily closing basis. Only a 4-hour close above the current channel resistance would offer an opportunity to get long. Key resistance comes in at 2.0970 and 2.1700.