GBP/CAD has been cruising above a rising trend line these days, and it looks like another dip to support is in order.
Can the uptrend stay intact?
Let’s take a closer look at the area of interest seen on the 4-hour time frame!
GBP/CAD: 4-hour
GBP/CAD 4-hour Forex Chart by TradingView
Crude oil prices have been on a tear again these days, lifting the correlated Loonie and dragging GBP/CAD down from its highs around the 1.8100 region.
The pair is now down to its 50% Fibonacci retracement level just above S2 (1.7890) but could still go for a larger dip to the rising trend line that’s been holding for the past couple of months.
Will support hold or break this time?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the British pound and Canadian dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!The 61.8% Fib level is closer to the trend line and former resistance zone, which also happens to coincide with the 200 SMA dynamic inflection point that adds to its strength as a floor. In addition, the 100 SMA is above the 200 SMA to suggest that the uptrend is more likely to resume than to reverse.
Still, a break lower could drag GBP/CAD further south to S4 (1.7770) then S5 (1.7710) near the swing low, as another leg higher for crude oil could spur a reversal for the pair.
Better keep tabs on headlines on the OPEC-JMMC meeting that’s going on to gauge where the energy commodity and oil-related Canadian dollar might be headed next.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier market catalysts when trading this one. Good luck!