Weekly chart shows that GBP/CAD has been forming a giant ascending triangle since May 2010. Even though the ascending triangle is a bullish formation that usually forms during an uptrend as a continuation pattern, there are instances when ascending triangles form as reversal patterns at the end of a downtrend.
The pair had turned north after touching the lower band of the triangle (March 2012). GBP/CAD pulled back to 50% Fibonacci after it hit 1.6200 resistance. Recent price action shows that the pair completed its correction and turned north once again. On weekly chart the price is above the kumo (clouds which we use to determine the trend). However, the pair is still inside the kumo on daily chart, suggesting that there is an ongoing battle between the bulls and the bears. GBP/CAD is trading above the kumo on H4 chart and Tenkan-sen (Conversion Line, which is a nine-day moving average) crossed above Kijun-sen (Base Line, which is a twenty six-day moving average). This is a bullish sign.
1.6080-1.6100 zone is the first hurdle that may slow the bulls’ march. If the pair breaks through, there will be resistance at 1.6236 before the pair tests 1.6390. If the bears successfully defend 1.6100 area and the pair reverses, look for support at 1.6015, 1.5968 and 1.5920. A weekly close below 1.5920 would chance the scenario.
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