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A much needed quiet session yesterday produced a few setups for us to keep an eye on over the next few days. The first setup on the list is GBPCAD.
The pair saw a ton of bullish momentum to start the year, climbing 1,800 pips between January 8th and February 24th. However the market has struggled since then as it has lost almost 1,000 pips from the 2015 highs.
During this decline, the pair has formed a falling wedge pattern that is best seen on the 4 hour chart. The bears took advantage of a fairly quiet session yesterday to push the market below wedge support, confirming the potential for a move lower.
After closing below support, the very next 4 hour candle can be seen rejecting former wedge support as new resistance. This gave us the bearish price action necessary for a short entry. However we were missing one thing – the retracement.
This leaves us waiting for a move back to the .8600 area for a more favorable entry to sell the pair.
Summary: Watch for a move back to the .8600 area, which would present a favorable selling opportunity. Key support comes in at the December 2014 high of .8400.