If you frequent this site, you have no doubt seen the recent commentary regarding GBPCAD. After breaking below a confluence of support at 1.8825 late last week, the pair reached our first objective at 1.8500 during Monday’s session.
But just because profits are booked doesn’t mean the pound cross is off my radar. Rather, Monday’s bounce helped to validate the next trade idea.
The fact that the pair found a bid at 1.8500 strong enough to launch the pair 300 pips higher is a clue. It re-establishes the notion that the level is meaningful and could, therefore, present a similar opportunity as that of the one that materialized on Friday.
Yesterday’s rally also served to close the weekend gap that was left open from 1.8779. This allows traders to initiate new short positions without being concerned about the gap closing and leaving them on the wrong side of the market.
Note that as we move closer to the much anticipated June 23rd “Brexit” vote, the level of volatility for all GBP pairs will likely increase. However, with the vote still more than two weeks away we should have a bit more time before the price action becomes untradable.
Want to see how we are trading this setup? Click here to get lifetime access.