Trading ranges in GBP/CAD

By: Mike Kulej

The recent daily chart of the GBP/CAD shows a prolonged downtrend, with the latest price swing taking this pair from 1.7200 to a 1.4800 level. Since early March, though, the trend has flattened, with the price forming a wide trading range. In fact, two different trading ranges are emerging now.
One of these ranges is defined by the most recent high and low, which are 1.5900 and 1.4800, respectively. With contracting daily ranges, the GBP/CAD is likely to remain in this zone for a near future, measured probably in weeks and maybe even months. The ADX indicator, which is a good trend-defining tool, is virtually flat, with extremely low reading. Until this indicator starts moving up again, the daily chart is unlikely to develop any meaningful trend.
Another, smaller trading range is also visible within the larger one. Over the last couple of weeks, this cross has been oscillating between 1.5550 and 1.5100. Both of these ranges could provide good trading opportunities. For as long as the price remains within them, one could use oscillating indicators, like the MACD or the Stochastics, for reversal trading. The larger range can be target on the daily chart, while the smaller one should be traded using the 4H chart or maybe even the 1H time frame. Both could be productive for some time.