- The GBP/CAD bounced a bit during the trading session on Friday as we tested the 50-Day EMA, a technical indicator that a lot of people will be paying close attention to.
- Furthermore, the 200-Day EMA sits below there, so therefore it’s likely that we will continue to see that general vicinity offer significant support, as it typically does.
- After all, we recently had seen the 50-Day EMA break above the 200-Day EMA, and now we are in the midst of the so-called “golden cross.”
Oil markets continue to struggle, and therefore it’s probably worth noting that the Canadian dollar will course move with that commodity as it is quite often used as a proxy. At the same time, we have seen quite a bit of strength in the British pound, so it does make quite a bit of sense that we would see this pair continue to go to the upside. I would not call this a bullish flat, but it does kind of have that feel. If we break above the 1.65 level, then it’s likely that this pair goes looking to the 1.69 level, perhaps even the 1.70 level, an area that would be important from a psychological standpoint, as well as previous resistance.
This Remains a Volatile Market
If we break down below the 200-Day EMA, it’s possible that we could go down to the 1.55 level, but that would obviously be a significant breakdown. Ultimately, this is a situation where I think we will continue to buy debts, but the next couple of days will be crucial in determining where we go next. I do not have any interest in trying to put a huge position on, but this is a pair that’s worth watching due to the fact that it has broken to the upside so violently, and now is offering a little bit of value if we do in fact see this market continue to go to the upside.
Regardless, I think you will see a lot of volatility, and therefore it’s likely that we have more choppy behavior over the next couple of sessions than anything else. With that being said, I think this remains a volatile market, but quite frankly it certainly looks as if Friday may have been the first shot across the bow for the resumption of upward momentum.
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