GBP/CAD traded lower yesterday after it found resistance near the 1.7310 hurdle, which acted as the lower bound of the sideways range that contained the price action from the 28th of June until the 18th of July. The tumble was stopped fractionally above the 1.7165 support, defined by the lows of the 19th and 20th of the month, but recovered only slightly to meet resistance at 1.7220 before coming back under selling interest. In our view, the fact that the pair continues to trade below the lower end of the aforementioned range keeps the outlook cautiously negative.
If the bears prove strong enough to continue pushing the battle lower and manage to break the 1.7165 hurdle, then we may see them driving the rate towards our next support territory of 1.7070, defined by the low of the 31st of May. Another dip below that level is possible to pave the way for the psychological area of 1.7000, also marked by the inside swing peaks of the 10th and 11th of January.
Shifting attention to our short-term oscillators, we see that the RSI lies below 50 and points down, while the MACD lies below both its zero and trigger lines, pointing south as well. Both these indicators detect downside momentum and support the notion for the pair to continue drifting lower in the foreseeable future.
On the upside, a clear break above 1.7220 could open the way for another test near 1.7310, the lower end of the prior range. That said, we would still see a decent chance for the bears to jump back into the game from that zone. We would like to see a clear move above 1.7345 before we assume that the rate is back within the range. Something like that could initially aim for the 1.7410 barrier, the break of which could open the way for the upper bound of the range, at 1.7455.
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