GBPCAD bounces off key resistance
29 May 2023
Many markets are closed today, which explains the lower volatility and decreased momentum. Nevertheless, we can still find some interesting trading occasions on the market. Today’s one is coming from a slightly less popular instrument that is probably not the first pair of your choice – the GBPCAD.
In the past few months, the GBPCAD was in a proper up-trend, with the price making long-term highs at the beginning of May. But the rise was probably the last one in a while as, in reality, the price created a false bullish breakout (yellow) above the resistance at 1.684 (orange). False breakouts are usually great signals to trade in the opposite direction and in this case, it might be the same.
The GBPCAD is currently back below the 1.684 resistance and, in addition, it is trading below the up-trendline (black) as well. What is more, the last contact with the orange area on Friday created a shooting star candle which was a sign of rejection of this area. As long as the price stays below the 1.684, the sentiment is negative and the price will most probably continue to drop. The GBPCAD climbing back above the area is possible, but not really probable. In my opinion, the sell signal is ON.