GBP/CAD came under renewed selling interest today, breaking below the short-term upside support line taken from the low of August 9th. That said, the rate is still trading above the key support obstacle of 1.6160, marked by Tuesday’s low, and thus, we would prefer to wait for a dip below that hurdle before we start examining whether the short-term bearish reversal has been completed.
Such a dip could signal the completion of a double top formation, and may initially set the stage for declines towards the low of August 21st, at around 1.6065, or the low of August 15th, near 1.6025. The rate could stall around there, or even rebound somewhat, but as long as it would be trading below the aforementioned upside line, we would see decent chances for the bears to shoot again and aim for another test near those levels. If the next leg down drives the battle below 1.6025, then the bears may put the 1.5925 zone on their radars, which is defined as a support by the lows of August 13th and 14th.
The RSI lies below 50 and points down, while the MACD, already below its trigger line, looks ready to fall into its negative territory. These indicators suggest that the rate may have started picking up negative momentum and increase the chances for a possible break below 1.6160.
In order to start assessing whether the outlook has turned positive, we would like to see a decent recovery above the 1.6345 territory. Such a move would not only confirm the rate’s return above the short-term upside line, but also a forthcoming higher high on the 4-hour chart. The bulls could then get encouraged to push for the 1.6440 area, marked by the highs of July 24th and 25th, the break of which may extend the advance towards the 1.6545 zone, defined by the inside swing low of July 1st.
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