Good morning team,
Well done to those who traded GOLD and the USDCAD overnight. Hopefully you all read the article on GOLD which was emailed out to you all.
Today we are taking a look at the GBPCAD.
Data released last Wednesday showed the UK suffered the worst economic slump in the second quarter amongst the big EU economies. Analysts are suggesting we could see brighter news this week. The BOE is standing firm on interest rates, all members voted for no change in rates holding at the 0.1% level. Retail and Producer price and CPI data showed the economy could be on its way towards a recovery already. The only risks to the GBP are the ongoing Brexit negotiations.
GBPCAD – Daily Time Frame
RSI is being supported by a trend line signalling further upside could be in play.
There has also been a potential bull flag breakout followed by a retest of the formation.
GBPCAD – 4 Hour Charts
There are a number of indicators suggesting the pair will move higher. Firstly, there is a fairly obvious looking inverted head and shoulders formation. Secondly, a bull flag breakout followed by a retest. The GAN FAN is also providing inclining support at this level.
This setup up provides a great risk V reward ratio. If the market breaks below the inclining support level we can close the position with a very small loss as the market will likely continue lower towards the 1.7180 support.
Trade Setup: BUY – Market execution, current rate 1.7321, stop loss 1.7260 and take profit left to run.
Stop Loss: 61 pips
If the inverted head and shoulders formation plays out we could see the pair rise towards the 1.7600 – 1.7700 level. This is potentially a long term hold, and a very big ask!
Strategy is to take this position up in stages.
If the market breaks the inclining support level we will close out with a 30-40 pip loss.