The GBP/CAD pair initially fell during the session on Monday, but as you can see bounced enough to form a nice looking hammer. It appears that the 0.68 level is trying offer some type of support, and as you can see, it has been resistance in the past point all the way back to 1 October. With that being the case, it makes sense that we would have buyers in this vicinity, but one thing that concerns me a bit is the fact that the markets have struggle to go higher over the last several sessions. With that being the case, we have to pay attention to both the British pound and the Canadian dollar against the US dollar, as it shows relative strength between the two currencies.
With that being the case, the Canadian dollar looks especially vulnerable, so I think we probably will make another attempt to the upside, but without a doubt the 1.70 level above will be difficult to overcome, but ultimately should be what happens.
Choppy, yet positive.
This market has been choppy for quite some time, but it's also had a nice positive uptrend to it. I believe that will continue, simply because the British pound has been somewhat strong relative to other currencies against the US dollar, and I see no reason why that will stop. In fact, there's also the chance that the market could breakout to the upside in the GBP/USD pair, which should send this pair much higher as well, after all it is the British pound versus a North American currency, as the two main North American currencies tend to move in the same relative direction against other currencies.
Both of these currencies are somewhat influenced by oil, although Canada certainly has the advantage in that realm. A lot of people don't realize it though, but British Petroleum alone reduces quite a bit of Forex transactions when it comes to oil, so obviously that affects the British pound as well. All things being equal though, if we break the top of the hammer for the session on Monday, I'm buying.
