Almost one week ago I mentioned an area on the GBPCAD that was likely to intensify selling pressure if broken. That region is outlined by 1.7010 and 1.7043.
Twenty-four hours after my commentary was released, the pair produced the break we were patiently awaiting. Additionally, the pair retested the 1.7010 handle (1.7008 to be exact) as new resistance, which gave us a favorable opportunity to get short.
Less than 72 hours later, GBPCAD hit our 300 pip target at 1.6700.
Even with a conservative 70 pip stop loss, this single trade setup dished out a profit of 4.3R. For those not familiar with R-multiples, that’s an 8.6% gain if risking 2% of your account balance.
However, instead of pausing at the 1.6700 handle, the pair has now broken below the multi-year level on a 4-hour closing basis. The technical break as shown in the chart below leaves us watching for yet another retest of former support as new resistance.
As for downside targets, the 1.6400 area is a prime suspect. The level served as support between October of 2009 and January of 2010 before switching to resistance from August of 2010 to October of 2011.
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I like the idea but I am concerned about the bullish divergences shown on the 4 hr charts. I would appreciate your comments on this
Kevin, I don’t pay attention to divergence from various indicators. For every time bullish or bearish divergence works there are three times when it doesn’t work.
Hello Justin ,could justfy what happened for three pair regarding the recommendations for the pair targeting 1.64 .Best
Abdullah, I don’t understand the request. Do you have a specific question?