GBPCAD is well on its way to retest the 1.6600 handle, an area that boasts several key attributes that make it one worth keeping an eye on.
There are four reasons why I believe the pair could struggle at 1.6600 should it reach this level over the next few sessions.
As always, we’ll start with a look at the big picture.
Notice that the somewhat controversial 76.4% Fibonacci level comes in near 1.6600 when measuring from the 2013 low to the 2015 high. This undoubtedly contributed to the rally effort in mid-August.
A Fibonacci number on its own isn’t all that significant, especially the less common 76.4% handle. However, the fact that other levels line up so precisely with swing highs and lows make it worth mentioning.
The next two reasons come in the form of an intersection of two levels. The daily chart below shows how they come together.
Note that we have the swing low which was carved out between August 15th and 16th as well as a trend line that extends from the pre-Brexit high of 1.9125.
These three factors alone make for an area worth watching, but there’s one more to go.
The fourth reason is the 4-hour ascending channel you see in the chart below. Notice where resistance lines up.
Now, the idea that the 1.6600 area will attract sellers is predicated on the notion that the GBPCAD will rally at least another 100 pips from current levels. At the moment buyers are having a little trouble with the September 15th trend line I mentioned on Sunday.
But regardless of what happens from here, I’ll be interested in selling opportunities so long as the pair trades below the August lows on a daily closing basis.
Whether that opportunity materializes on a retest of the confluence of resistance discussed above or a simple close below 4-hour channel support is anyone’s guess, but the ingredients for a setup are there.
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