I’ve got this simple GBP/CAD descending triangle setup on my radar today since the pair looks ready to test the resistance soon!
Do you think sellers will still defend the ceiling this time?
GBP/CAD 4-hour Forex Chart by TradingView
In case you missed the GBP/CAD support bounce last week, you might have another chance to play this triangle pattern when the pair tests the resistance.
As you can see from the 4-hour chart above, price is closing in on the top of the triangle around the 1.6400 major psychological mark.
So will it hold or will it break?
Technical indicators seem to be in favor of another bounce, as Stochastic is already in the overbought region to signal exhaustion among buyers.
Turning lower would confirm that sellers are ready to take over and drag GBP/CAD back down to the triangle support at the 1.6100 major psychological level.
Also, the 100 SMA is below the 200 SMA to reflect bearish vibes. However, the pair already climbed above both moving averages, so these might hold as dynamic support levels on dips.
Earlier this week, economic data from Canada turned out mixed, as the headline CPI and core retail sales figures fell short of estimates. Meanwhile, headline consumer spending came in line with estimates of a 0.5% uptick.
Don’t forget that BOC policymakers hinted at a likely pause in their tightening efforts now that inflationary pressures have been slowing.
As for the U.K. economy, some green shoots were seen in the PMI surveys. The flash manufacturing PMI for February improved from 47.0 to 49.2 while the flash services PMI jumped from 48.7 to 53.3.
With that, a bullish triangle breakout might be in the works, possibly leading to a rally that’s at least the same size as the chart pattern.
That’d be roughly 700 pips, so make sure you don’t miss it!
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