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GBPCAD: One Step Closer to Confirming 1,500 Pip Reversal

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Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.

Click here to get access to the same charts I use.

At the beginning of the month (July 2nd to be exact) I pointed out the potential for a 1,500 pip drop on the GBPCAD. The head and shoulders reversal was far from confirmed, but sellers were well on their way to making it a reality.

You’ll also note that the formation of the right shoulder started with the June 22nd bearish pin bar that I discussed in the June 24th weekly forecast.

Since July 2nd, the pair has managed to move less than 100 pips. Yes, it has taken the GBPCAD nearly three weeks to move just 90 pips.

But for the last week, the slow grind hasn’t been much of a surprise. I mentioned the 140-pip range on the 11th of this month. It was range support at 1.7300 that was problematic for those interested in the 1,500 pip reversal pattern.

However, yesterday’s session took care of that and then some. Wednesday’s 1.7204 close puts the 1.7300 handle (former range support) in the rearview mirror. It also means that any retest of the 1.7300 area should attract an influx of selling pressure.

The neckline of the pending head and shoulders, on the other hand, remains untested near 1.7160. We’ll need to monitor the price action over the next few days to see how the GBPCAD reacts to this level that extends from the year to date low.

For the moment, though, that 1.7300 resistance area is a “must hold” for sellers. And as long as the pair remains below it on a daily closing basis (New York 5 pm EST), the GBPCAD remains vulnerable.

Note: What you see in the chart below is only the right shoulder, not the entire head and shoulders pattern.

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GBPCAD daily time frame

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8 comments
Hernando says

Good night, Justin, thanks for your analysis. That is to say that we wait for the breaking of the neckline and its confirmation to enter the downside; asks if for some reason the scenario is not given, would it go higher in the break of the resistance line at 1.7300 or wait until the break of the dynamic resistance line that is formed from March 19 to June 22 and its respective confirmation?
Thanks for his teachings. See you from Colombia.
Translated by Google

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    Justin Bennett says

    Keep it simple. Wait for the close below the neckline if you believe this is indeed a head and shoulders pattern.

    Reply
Kelvin njenga says

How is EurAUd doing is it ready for short. My daily and 4hr seems bearish

Reply
    Justin Bennett says

    Refer to my last post about it. Not much has changed.

    Reply
Roy Peters says

Nice. Waiting patiently for the confirmation.

Reply
pascal says

Thanks,Justin
that was a great update!

Reply
    Justin Bennett says

    You’re welcome. Glad to hear it.

    Reply
Olan says

Eurcad sees to be defying technical odds. It seems to have overshot the descending trendline on my chart unless I have placed my line wrongly.
I shorted at 1.5360.
Is it time to jump ship or is this market noise. ?
Master, please say something on this pair

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