Short term
Trade view / 26 September 2016 at 12:55 GMT

GBPCAD may be going south on royal tour

FX Consultant / IFXA Ltd
Canada
Background

The Duke and Duchess of Cambridge are on an eight-day tour of Canada and in honour of their visit GBPCAD may embark on a tour of its own and visit the bottom of its August-September range.

GBPUSD has come under renewed pressure over Brexit issues. At the September 15 policy meeting, the Bank of England said they remain concerned about a ” material slowing” in growth and left the door open for another rate cut. GBPUSD has been declining steadily since peaking at the beginning of September.

USDCAD has been see-sawing within a 1.2750-1.3250 band torn between soft domestic data, a modestly dovish Bank of Canada statement and flip-flopping oil prices.

The GBPCAD technicals are bearish. GBPCAD appears headed to the bottom of the 1.6595-1.7550 trading range that has been intact since July. The break below support at 1.7265 on September 16 sparked another move lower and that downtrend remains intact while prices are below 1.7105.

Management and risk description 

This trade has a lot of vulnerabilities including another dovish speech by Bank of Canada governor Poloz on Monday. The stop will get triggered by a drop in oil prices stemming from disappointment with the Opec meeting in Algiers. It is also vulnerable to anti NAFTA rhetoric from Donald Trump during the Monday night presidential debate.

Trade idea parameters

Sell: ½ GBPCAD at market (1.7040) balance at 1.7090
Stop: 1.7120
Target: 1.6820
Time horizon: 4 days

Chart GBPCAD 30-minute showing break of corrective rally
usdcad
 Source: Saxo Bank 

Chart: USDCAD hourly highlighting intraday downtrend.
usdcad
Source: Saxo Bank 

Chart: GBPCAD 4-hour with Fibonacci levels shown
usdcad
Source: Saxo Bank 

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

— Edited by Clare MacCarthy

Non-independent investment research disclaimer applies. Read more
26 September
fxtime fxtime
Although to play safe I will turn the trade at 1.7110 !!
26 September
Michael O'Neill Michael O'Neill
yes, GBPCAD is a tad choppy.
26 September
Michael O'Neill Michael O'Neill
UPDATE; This trade died before it even got going. Traders bought USDCAD in a continuation of Friday's move, triggering stop losses along the way and conveniently ignoring a rally in WTI. In fact, in a day when the US dollar was weak across the G10 spectrum, the greenback was still able to beat up on the loonie.

The stop loss was triggered for a loss of .0058 points.
27 September
fxtime fxtime
Bad luck with the loss Mike but well managed...did you get a chance to turn your trade?
I am going to cover my 1.7110 long now at +95 which was pure luck so prefer to bank the profits whilst they are available as I suspect this is going to be a whippy marketplace.
27 September
fxtime fxtime
FWIW I suspect R1 is 1.72420 which is nearly where we are now. Watch the market storm away now just to prove me wrong LOL.

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