Sophia Todorova is the host of the live trading room for the London session. She has a background in teaching and psychology, and as such relishes the idea of assisting new traders on their journey to Forex trading success. Technical Analysis is her passion. The charts speak, and she listens. To Trade Live with Sophia Join Winners Edge Trading Premium Services.
Regular readers of this blog will probably have realized by now that the Gbpcad currency pair is one of my favorites. It is a volatile pair, but a good trade entry will result in extended runs most of the time. During the coming week, I will be focusing quite a bit on it, because I believe that some big moves will be coming up.
A valid case can be made for both bearish and bullish developments from here. I will examine the possibilities for both:
The Bulls
The most recent direction has been bullish; the monthly timeframe having formed a pivot after an extended bearish run, and the weekly currently holding above its inner trendline, as well as above a range resistance of five weeks. Additionally, the daily pulled back and tested the 61.8% Fibonacci retracement of the bullish swing from1.4999 to1.6207. Although there was a retracement just below the 25% extension level, it bounced back quite vigorously at the 61.8% retracement of the 1.5791-1.6446 swing.
Interesting Observation: The three recent bullish swings on the daily, and their retracement levels are: 1.4999-1.6207 (.618); 1.5419-1.6190 (.50%); and 1.5791-1.6450 (.618).
Their extension levels, respectively are: 1.6953 (61.8); 1.6961 (86%); and 1.6968 (78.6%)
This is important because it is a very close convergence of fibs. These price levels are located at a key weekly resistance, in the region of the outer trendline. Regarding the charts that are attached below, for easy recognition: The first one is the Daily, second is Weekly, and the last one is the 4Hr.
The Bears
The weekly chart is technically still in a downtrend, and the bullish move could prove to be a mere correction before continuation of the downtrend. Added to the bearish potential, is the fact that the market is currently trading just below an incredible shelf of past support on the weekly chart. Even the bullish breakout of the range has been unable to really accelerate.
This can be seen by the bearish candle that formed two weeks ago, in spite of the bullish breakout of the trading range. The 50% fib level of the 1.7892 – 1.4765 swing is located at 1.6329, just below the resistance which results from the past support wicks. Looking at it from a smaller scale, the 4hr chart shows the market trapped at the underside of the previously broken up trendline.
The above information is a lot to digest, so I will have to follow up on this article during the coming week. I will then focus on potential near-term trading opportunities, as well as their target levels. Thanks a lot for reading, and do enjoy the rest of your weekend.
If you are interested in trading this with me, it is a good idea to follow me on twitter, since I am able to give quick updates there, and you will be able to get them instantly.
You can also check out my last post which really played out well: http://www.winnersedgetrading.com/gbpaud-technical-analysis-update/
Other useful blogs:
Forex Crunch: Eurusd Outlook- August 23-27
The GeekKnows- Daily commentary on eurusd
One other free trading tool I recommend is Currensee . It can be a useful tool to be able to see how other professional traders are doing.