We’ve got a couple of top-tier U.K. events lined up this week!
I’m counting on big moves from pound pairs, and I’ve got this GBP/CAD break-and-retest play on my radar.
You see, the pair already busted through its descending trend line to indicate that a reversal from the selloff is in the works.
GBP/CAD 4-hour Forex Chart by TV
A quick correction to nearby support areas might be needed before more pound bulls charge, though.
The handy-dandy Fib tool shows the potential levels where buyers might be waiting to jump in. The 38.2% retracement level is already close by at 1.6837 while the 50% Fib is near the 1.6800 major psychological handle.
A larger correction might reach the area of interest that lines up with the 61.8% Fib and former trend line around the 1.6750 minor psychological mark.
The 100 SMA is still below the 200 SMA for now, but the gap between the indicators is narrowing to hint at a likely bullish moving average crossover.
A bit more selling pressure could be in play while Stochastic has room to head down before reaching the oversold region. Then again, the oscillator is already starting to turn higher to suggest that buyers are eager to take over.
I’d probably hold out for the release of the U.K. CPI numbers to gauge how this week’s BOE statement might turn out and how GBP/CAD could react. After all, another stronger than expected result could seal the deal for a hawkish announcement and an early rally for the pair.
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