GBP/CAD spiked up on Friday but hit resistance at 1.7770 and quickly pulled back to find support near the 1.7570 zone. On Monday, the rate traded in a consolidative manner, between that support and the 1.7635 resistance. Despite Friday’s slide, the price structure remains of higher peaks and higher troughs above the short-term uptrend line drawn from the low of the 30th of May and thus, we would consider the short-term outlook to still be positive.
If the bulls are strong enough to take charge from current levels and push the rate above the 1.7635 hurdle, then we would expect them to drive the battle up for another test near Friday’s high of around 1.7770. A decisive break above that zone would confirm a forthcoming higher high on the 4-hour chart and could signal the continuation of the prevailing short-term uptrend.
Shifting attention to our short-term momentum indicators, we see that the RSI lies above 50, but it is turning down. It could fall below 50 soon. The MACD, although positive, lies below its trigger line, pointing south as well. These technical studies suggest that another retreat may be on the cards for now.
A clear dip below 1.7570 could confirm the case and perhaps aim for the aforementioned uptrend line. Nevertheless, even if this happens, we would still consider the near-term picture to be somewhat positive. We would still see a decent chance for the bulls to shoot from near the trend line.
We would like to see a clear break below the short-term trendline before we abandon the bullish case and take the sidelines. Such a move could initially aim for the 1.7455 barrier, marked by the low of the 21st of June. In order to change our view to bearish, we prefer to wait for a dip below 1.7425. That could open the path towards our next support obstacle of 1.7367, defined by the low of the 15th of June.