ForexPros Daily Analysis July 25, 2011
Possible Rounded Bottom in GBP/CAD
The Canadian Dollar was very active last week, due to enormous amount of data released in that country. Even though a lot of it was positive, like a hint of interest rates increase in the near future, the Canadian Dollar remained largely stalled.
The CAD pushed the US Dollar to a new three-year low, at 0.9424, but in relation to most other currencies, it either consolidated or even lost some ground. In case of the GBP-CAD, for example, the price is in a congestion zone, perhaps best visible on the intermediate term chart.
This pair sold off recently, falling from 1.6144 to last week’s low of 1.5246. However, the most prominent feature of this chart is the consolidation contained between 1.5525 and 1.5246. In the process, the GBP-CAD has built a possible rounded bottom, a little complicated but unmistakable.
In order to confirm this formation, the price must climb above a strong resistance of 1.5525. Currently, the GBP-CAD is not far away and appears ready to test that level again. With the price already above the 100 SMA and MACD turning positive as well, a successful breakout above the resistance could send the GBP-CAD on a 300 pips rally.
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Forex Trading analysis written by Mike Kulej for Forexpros.
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