Important: This site uses New York Close Forex Charts so that each 24-hour session starts and ends at 5 pm EST. These charts are essential for trading price action.
Watch the video below for an update on the GBPCAD inverse head and shoulders pattern.
Don’t forget to scroll down for more commentary and an annotated chart.
On September 9, I wrote about a possible 500-pip reversal for GBPCAD.
The inverse head and shoulders that has been developing here since July has a height of 500 pips.
Therefore, a close above the neckline was going to confirm a 500-pip objective, or approximately 1.6800.
I also wrote how GBPCAD was approaching breakout territory on the 12th, less than 24 hours before Friday’s massive rally.
But I couldn’t have anticipated a move that significant.
Not only did the pair breakout from consolidation and confirm the inverse head and shoulders, but it also reached our first target at 1.6600.
Take a look at the price action between August and October of last year to see why 1.6600 is significant.
I pointed out that 1.6600 region in Sunday’s video as well.
More specifically, I said you probably don’t want to buy GBPCAD at or around 1.6600.
Monday’s gap down made sure we couldn’t do that.
But something else is happening that I want to touch on today.
If you watched Sunday’s video, you know that 1.6430 was the support level of interest for this week.
You also know why.
The 1.6430 level represents the highs from last July. It’s also very near the 50% retracement of Friday’s breakout candle.
Be sure to watch the video above for an explanation.
So far today, GBPCAD is bouncing from 1.6430 with a current session low of 1.6415.
I’m not claiming that 1.6430 will hold as support. I have no way of knowing that.
However, as long as buyers are stepping in at 1.6430, that 1.6600 resistance area is exposed with a close above that targeting the 1.6800 measured objective.
If we do start to see GBPCAD slip below 1.6430, the pair could be headed for those recent highs near 1.6320.