Trade Recommendation: GBP/CAD
The British Pound/Canadian Dollar (GBP/CAD) pair became bearish in January 2016 when it generated a lower high of 2.09161. The move killed the pair’s bullish momentum. The market responded by creating two consecutive bearish flags on the weekly chart that saw the pair plunge to 1.81020 in April 2016.
While the pair rallied, it generated another lower high of 1.93006 in May 2016. Since then, GBP/CAD created a series of lower highs and lower lows until it bottomed out at 1.57352 in January 2017. In one year, the British Pound lost almost a quarter of its value against the Canadian Dollar. However, those who are interested to buy the pair now have the opportunity to grow their investments.
Technical analysis reveal that the British Pound/Canadian Dollar pair has broken out of 1.78 resistance to trigger the bullish double bottom reversal structure on the weekly chart. On March 13, 2018, the market surged from 1.78549 to 1.80996. The bullish price action may have sealed the reversal.
Currently, GBP/CAD is flashing overbought signals in the weekly chart. Might be a good time to buy once the pair dips a bit.
The strategy is to buy as close to 1.80 as possible. If the pair holds on to 1.80, it will likely use the new support to gather momentum and push the British Pound to 1.95 against the Canadian Dollar. The process may take six months.
Weekly Chart of GBP/CAD on Forex.com
As of this writing, the British Pound/Canadian Dollar pair is trading at 1.82412 on Forex.com.
Summary of Strategy
Buy: As close to 1.80 as possible.
Featured image courtesy of Shutterstock.