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GBP/USD and USD/CAD: Levels, Ranges, Targets

By Brian TwomeyForexSep 18, 2016 01:31PM ET
www.investing.com/analysis/gbp-usd-and-usd-cad:-levels,-ranges,-targets-200154121
GBP/USD and USD/CAD: Levels, Ranges, Targets
By Brian Twomey   |  Sep 18, 2016 01:31PM ET
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Before Friday's CPI release, GBP/USD V USD/CAD Correlated +36%. After CPI, Correlations dropped to current + 27%. GBP/USD at the 1.2995 close sits exactly on USD/CAD's 200 day moving average while GBP/USD fails to register inside its own moving averages from 5 to 253 days.

USD/CAD at the 1.3207 close sits exactly on its own 253 day average and between GBP/USD 5 and 10 day average. A collision will occur inside the current structure at GBP/USD 1.3237 and USD/CAD 1.3046. USD/CAD enters a downtrend while GBP/USD travels higher.

Before CPI, the vital break point for GBP/USD above was exactly my own 1.3229 alongside many tough resistance points, including its own 5 day average at 1.3238 and USD/CAD 253 day average at 1.3212. GBP/USD's 10 day average at 1.3301 crossed above the 20 day at 1.3252 and what was next was the 50 day at 1.3170.

Once GBP/USD broke 1.3170, it entered into no registration to its own moving averages from 5 to 253 days. The best GBP/USD offered was USD/CAD's 5, 10, 20 and 50 day averages in order at 1.3148, 1.3014, 1.3026 and 1.3009.

USD/CAD before CPI bolted from its own 253 average at 1.3212, broke GBP/USD's 5 day average at 1.3238 and dead stopped before GBP/USD's 50 day average at 1.3252. Once USD/CAD broke 1.3212, it failed to register to its own moving averages.

The current big line break for USD/CAD is 1.3403 and found at GBP/USD's 100 day average at current 1.3392. Rough resistance is found at 1.3305, 1.3307, 1.3351 and 1.3364.

Supports are located at 1.3162 and translates to USD/CAD's 5 day average at 1.3160 and GBP/USD's 50 day average at 1.3165. USD/CAD to see 1.3160's must first break GBP/USD's 5 day average at 1.3189.

If USD/CAD breaks below 1.3160's, it enters into uncharted moving average territory from 5 to 253 days in terms of GBP/USD but USD/CAD MA's exists support at its 20 day average at 1.3046 and 10 day at 1.3044. The separate model then reveals next supports below 1.3160's at 1.3122 and 1.3120. The base current is located at 1.3113.

USD/CAD above lacks registration to its own moving averages but resistance is found at GBP/USD's 10 and 20 day MA's at 1.3263 and 1.3237 in current order. The separate model reveals resistance above at 1.3262, 1.3268 and 1.3274. Above 1.3274 then USD/CAD heads to lower 1.3300's.

GBP/USD current big line break above is located at 1.3158 and is found at USD/CAD's 5 day average at 1.3160 and GBP/USD's 50 day average at 1.3165. The base for GBP/USD is 1.2782 and 1.2799. Both levels are uncharted in terms of USD/CAD and GBP/USD's moving averages 5 to 253 day so derived base bottoms from the separate model.

Further above the base and below the 1.2995 close exists further model supports at 1.2806, 1.2881 and 1.2903, 1.2910 and 1.2924. A further support exist at USD/CAD's 100 day average at 1.2981.

To travel higher, GBP/USD must break 1.3000, 1.3004 and 1.3015. Strong resistance exists at 1.3015 and 1.3010 because 1.3010 translates to USD/CAD's 50 day average. Next above as most vital for GBP/USD is 1.3063 but USD/CAD's 10 and 20 day averages must break in order at 1.3044 and 1.3046.

GBP/USD then has a clear path to USD/CAD's 5 day average at 1.3160 and GBP/USD's 5 day average at 1.3189. Above GBP/USD's own 5 day average at 1.3189 comes USD/CAD 253 day average at 1.3207 which is USD/CAD's current close price.

GBP/USD above 1.3207 can look to its own averages for next targets because it leaves USD/CAD's averages due to no levels associated from 5 to 253 day. GBP/USD above 1.3207 then targets next its own 20 day average at 1.3237 then its own 10 day at 1.3263.

Above 1.3263, GBP/USD enters uncharted territory because the 50 day at 1.3165 is severely misaligned. What exist next above the 10 day at 1.3263 is the 100 day at current 1.3392 then 200 day at 1.3867.

One can understand why the collision in GBP/USD 1.3237 and USD/CAD 1.3046. GBP/USD's 10 and 20 day averages are misaligned as the higher 10 day average at 1.3263 crossed above the lower 20 day at 1.3237. Further misalignment at the 50 day exist at 1.3165. The middle 1.3200's for GBP/USD will be rough unless the averages rightsize.

GBP/USD and USD/CAD: Levels, Ranges, Targets
 

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GBP/USD and USD/CAD: Levels, Ranges, Targets

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