Hello traders,
today we were looking for Pound opportunities and we aimed for a Buy strategy for GBP/CAD, where
the floor of a months-long channel was being re-tested with a view to bounce; being there no pieces
of strong event risk for the Loonie (=Canadian Dollar) today, it seemed likely that there would be
some degree of probability that the technicals would hold, as the rate-hike delay from the BoE had,
to some extent, already been priced in by investors worldwide.
We traded this will full confidence at one standard lot, with a NL of one hundred pips and a trailing
dynamic stop of half that; the trade, therefore, was worth just short of 1,000 USD when it hit the NL.
The positive data displayed below, which preceded the BoE Governor’s inflation report this morning,
was instrumental in giving the Pound confidence in pushing higher, as it highlighted once again that
growth, however sluggish, is pushing unemployment down and steering the country out of a triple-dip
recession:
From the technicals, we see in our chart below that the (pink line) Fib. resistance from the 2007 high to
the 2010 low range, and the black descending top showing lower highs, show a degree of compression,
which may result in either a reversal or a period of uncertainty for this pair; the opposing scenario would
lead us to a longer-term recovery of the UK job market and a narrowing of the forecast period towards
the 7% unemployment threshold (which would revive speculation of a nearer rate-hike deadline), which
could then give way to a wider retracement of the the pre-2008 highs.
Happy Trading.