Refocusing on GBP Following Recent Gains

Our Technical Analysis

Following the positive quarterly inflation report by the Bank of England (BOE), GBP posted moderate gains against a basket of currencies in the Forex market.  We have been monitoring the Canadian Dollar (CAD) against a basket of currencies and it appears to us the Loonie is due for moderate gains. We therefore believe the recent rally in GBPCAD provides a decent entry for a short trade, which only enhances the Risk-Ratio (RR) for the position.

GBPCAD Weekly Chart

Please click on the chart to enlarge:

GBPCAD Technical Strategy, 12 February, 2015

GBPCAD Weekly Chart, 12/02/15

The ‘Hanging Man’ is our first indication that corrective weakness is due for the FX cross.  Overbought RSI along with negative divergence in the monthly chart may confirm our bearish outlook for the cross. In order to perfect our entry, we are also using the daily chart to concrete our entry.

GBPCAD Daily Chart

Please click on the chart to enlarge:

GBPCAD Technical Analysis, 12 February, 2015

GBPCAD Daily Chart, 12/02/15

The daily chart does not provide a technical entry, however, yesterday’s shooting star is a clear warning to the market bears. Further gains may be seen towards to the upper shadow of the shooting star, which means we will layer our protective stop loss order above the shadow. It is possible for GBPCAD to trade as high as 1.9365 (the length of the shadow) before reversing lower. As this is not a ‘guaranteed’ scenario we are willing to take the short trade at market price and absorb the rally should it indeed materialize.

We must highlight that the monthly chart does indicate a resumption of the uptrend, We therefore believe a technical correction may be seen in GBPCAD following the moderate gains before the uptrend is due to resume.

GBPCAD Trade Alert Details

GBPCAD short @ market price
Take profit: 1.8570
Protective stop: 1.9470
RR: 1 : 3 (approx.)
Estimated duration: 14 days

Updates will be posted at the bottom of this page and you will be instantly notified when such updates are made via email.

12/02/15 UPDATE: GBPCAD is trading at 1.9160 at the time of this writing. We are closing 25% of the short trade at market price and shift the protective stop to the entry. This trade alert has been opened to all traders as the trade is in a decent profit at the time of this writing.

04/03/15 UPDATE: With a slight delay, GBPCAD triggered the protective stop loss order that was shifted to the entry. We have nevertheless ended the trade with a profit.

If you wish to have access to all our trade alerts in the spot Forex market when they are released you may apply for the global trade alerts package.

Last Updated on March 28, 2015