By: Mike Kulej
One of the currency pairs that experienced a lower volatility recently is the GBP-CAD. Like many other Pound crosses, this pair hit a multiyear low few months ago, at 1.4830. Since then it rebounded to almost 1.6500 and settled in a sideways pattern.
Chances are, this trendless period will end soon. Looking on the daily chart, we can see a possible long-term bottoming pattern, resembling a large “cup with a handle”. The current congestion zone, between 1.5790 and 1.6470, is the “handle”.
This formation will be complete upon a breakout above the 1.6470, although one might be better waiting for 1.6500 to be breached on daily basis. There is a prior minor high at this level and a round number like that is always psychologically important.
If this happens, there are no other obstacles before the next resistance at 1.7270. One would like to see an upturn in the ADX to accompany the breakout. No guarantee that the GBP-CAD will move up from here, but it should be easier than the opposite direction.
Right now, the price is supported by numerous technical factors, which will make a move down difficult. There is the Ichimoku cloud, the 100 SMA, the 1.5790 low and the main trendline, all of which provide support.
