We recently traded GBPCAD after the pair managed to break free from a three-month bull flag pattern. Within just four days of closing above resistance, the pair had rallied to its 650 pip objective near 2.0970, which still stands as a multi-year high.
For the traders who missed the initial break, the 4-hour bullish pin bar that formed on December 10th offered a second opportunity to get long.
The pair now finds itself consolidating just below the aforementioned multi-year high at 2.0970. However, it’s unclear at this time as to whether the support area shown in the chart below will hold, which would give us another bull flag to consider in the coming days and weeks.
If the price action does carve out another flag pattern, it could present a favorable long opportunity as we enter the new year. That said, only a confirmed (second) retest of support followed by a close above resistance would give reason for further consideration.
On the other hand, if it falls apart, we can simply discard it and move on to the next trade idea. My bullish bias will remain intact as long as the pair trades above former channel resistance on a closing basis, which is now located near the 2.00 handle. Key resistance can be found at 2.0970 and 2.1700.