GBP/CAD traded lower on Wednesday and during the European morning Thursday, after hitting resistance once again near the 1.7165 barrier. Overall though, the price structure suggests a sideways activity since May 10th, between that resistance and the 1.7030 support, and thus, we prefer to take the sidelines for now.
In order to start examining further declines, we would like to see a downside exit out of the range, or even better, a clear dip below 1.7005, which is the low of May 13th. This may encourage the bears to push for a test near the low of April 30th, at around 1.6955, the break of which could extend the decline towards the 1.6868 area, defined as a support by the low of May 6th.
Shifting attention to our short-term oscillators, we see that the RSI lies below 50 and points down, while the MACD runs fractionally below both its zero and trigger lines, pointing somewhat south as well. Both indicators detect downside speed, but as we already noted, we prefer to wait for the rate to break below 1.7005 before we start examining whether the bias has turned bearish.
On the upside, a break above 1.7165 could signal the upside exit out of the range, but a move above 1.7207, may be the signal for more bulls to join in. This could initially encourage advances towards the peak of April 27th, at 1.7274, where another break could extend the gains towards the 1.7360 hurdle, marked by the high of the day before.
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