The Canadian dollar has sold off aggressively to start the week, and that’s putting it nicely. With this weakness of course comes strength in pairs such as USDCAD and GBPCAD.
I mentioned the potential for a USDCAD breakout on Monday which was confirmed during yesterday’s session. At the same time GBPCAD also confirmed a breakout scenario with fresh multi-year highs.
The close at 1.9617 puts the pair firmly above the previous seven-year high at 1.9555. Basic technical analysis tells us that this level should now become support, which offers two ways to approach a long opportunity.
The more aggressive trader can look to buy a blind retest of the 1.9555 area as new support. More conservative traders on the other hand can watch for bullish price action on the 4 hour or daily time frame.
Levels of interest to the upside include 1.9660, 1.9826 as well as the trend line that extends off of the February 2014 high. A retest of the key 2.00 handle could also be a very real possibility during the second half of 2015.
Summary: Opportunity to buy a retest of the former multi-year high at 1.9555. Key resistance comes in at 1.9660 and 1.9826.