GBP/CAD tumbled yesterday, falling below Monday’s low of 1.7245, thereby confirming a lower low and signaling the continuation of the prevailing short-term downtrend, as marked by the downside line taken from the high of Sept. 20.
The rate hit support near 1.7130, rebounded somewhat, but today, it resumed its slide, overcoming that barrier. All these technical signs paint a very negative picture, in our view.
The dip below 1.7130 may pave the way towards 1.7064, marked by the low of Jul. 5, or the low of Jul. 2, at 1.7024. If neither barrier can halt the fall, then the downtrend may extend below 1.7000, perhaps to test the 1.6950 zone, defined as a support by the low of Apr. 30.
Looking at our short-term oscillators, we see that the RSI slid back below its 30 level, while the MACD remains below both its zero and trigger lines, pointing down. Both indicators indicate strong downside momentum and signal that there is more downside in the offing.
In a bullish scenario, we would like a rebound back above 1.7245, a barrier marked by Monday’s inside swing low. This will also take the pair above the downside line taken from the high of Sept. 20 and may encourage the bears to pull the trigger and shoot for Monday’s peak, at 1.7367.
If they don’t stop there, we could see them aiming for the high of Sept. 24, at 1.7413, or the inside swing low of Sept. 21, at 1.7430.