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Trade view / 10 August 2016 at 13:30 GMT

GBPCAD getting ready to burn the bears

FX Trade Strategist / www.Loonieviews.net
Canada
Instrument: GBPCAD
Price target:
Market price:
Background

GBPCAD has declined steadily since peaking at 1.7526 on August 3. The decline was fuelled by the better than expected US employment report and a rebound in oil prices. 

GBPCAD is currently resting on support in the 1.6990-1.7000 area that has contained numerous prior declines since July 11. The highly anticipated Bank of England stimulus announcement drove GBPUSD lower but it has been unable to break support in the 1.2950-60 area.

This week’s oil price rebound is in jeopardy on the back of rising US inventories and news that Saudi Arabia had record production in July.

GBPUSD short positions are at record levels and are vulnerable to being squeezed with the release of any positive UK data suggesting a degree of topside vulnerability.

The lack of major data (until Friday’s US retail sales report) and the lack of follow-through selling in GBPUSD, combined with GBPCAD ‘s proximity to major support suggests a bit of a rally is in order.

Management and risk description

The dominant trend in GBPCAD is lower and this is a counter-trend trade idea. It is always dangerous to predict/anticipate a bottom in a currency pair which is what this idea is doing. More prudent traders should wait until the intraday downtrend line, shown on the 30-minute chart, is broken prior to entering the trade. The stop will get triggered on a rebound in WTI prices or on accelerated US dollar weakness vs. the G10 currencies.

Parameters

Buy ½ GBPCAD at market (currently 1.7010) and the balance on break of declining trend line on 30-minute chart. Currently 1.7070.  

Stop: 1.6925

Target: 1.7250

Time horizon: 4 days

GBPCAD 30-minute with downtrend line and noting second buy order level
gbpcad
Source: Saxo Bank

GBPCAD 1-hour with support and stop loss levels shown 
gbpcad

Source: Saxo Bank

GBPCAD 5-year daily with moving averages
gbpcad
Source: Saxo Bank

— Edited by Clare MacCarthy

Non-independent investment research disclaimer applies. Read more
1y
Dj TinTin Dj TinTin
long now or hold off until we see a break to the upside
1y
Michael O'Neill Michael O'Neill
I'm long now. It may be smarter to wait for the topside break
1y
Dj TinTin Dj TinTin
I'm long till sept thanks for the info
1y
Michael Liu Michael Liu
Hi Michael, do you still hold this position?
1y
Dj TinTin Dj TinTin
my fingers are going white from holding on to this trade
1y
Michael O'Neill Michael O'Neill
Grrrr-Stopped out at the lows.
1y
Dj TinTin Dj TinTin
still in hoping for some up tread
1y
Dj TinTin Dj TinTin
update on GBPCAD ?
1y
Michael O'Neill Michael O'Neill
It looks ugly still. It broke below the key support at 1.6900-70, then the stop line at 1.6925 and it looks like it is heading to 1.66 00 where the 76.4% Fibonacci retracement of the 2011-2015 range comes in. A break above 1.6880 is needed to extend gains back to 1.7000
1y
Dj TinTin Dj TinTin
see what today has in store

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