The GBP/CAD pair fell initially during the course of the session on Thursday, but found the 1.70 level below supportive enough to turn things back around and form a bit of a hammer. After all, this is obviously a very important level. We have broken down below it before though, so I think if we do it again, we very well could reach towards the 1.66 handle. A break above the top of the hammer which of course be a very bullish sign, and that’s when I anticipate happening today. If we can break above the top of the hammer, the market should then go to the 1.7250 level, if not the 1.75 handle.
Crude Oil
Crude oil is a very interesting influence on this market as the oil market also not only moves to the Canadian dollar as most people know, but it does have a bit of an effect on the British pound as well, as there are quite a few British oil rigs in the North Sea. Ultimately though, this is a market that I think will continue to go lower, simply because we are still watching the Forex market punish the British pound for the boat to leave the European Union. With this in mind, I think we could get a little bit of a bounce from here, but it should only be an opportunity for the sellers to build up momentum again. Once we break down below the bottom of the hammer, I think the downtrend will accelerate, and if we can even go from there and break down below the 1.66 handle, I feel we go to the 1.65 level, perhaps even lower than that.
The 1.75 level above still has plenty of resistance, as there is a massive gap just above there that will continue to offer quite a bit of bearish pressure. With this, I think that we are working with a “to speed” market. Short-term buyers, medium and long-term sellers.
