GBP/CAD traded higher today, breaking above the psychological zone of 1.7000. The pair has been in a rally mode since yesterday, when it hit support near the 1.6775 zone, with the break above 1.7000 perhaps signaling the completion of a double bottom formation. So, having that technical move in mind, we would consider the near-term outlook to have turned somewhat positive for now.
If the bulls are strong enough to stay behind the steering wheel, we would expect them to aim for the 1.7055 barrier soon, which is marked by the high of June 18th. If they are not willing to stop there, a break higher may carry larger bullish implications, possibly paving the way towards the 1.7175 territory, which provided strong resistance on June 11th and 16th.
Shifting attention to our short-term oscillators, we see that the RSI stands near its 70 line and still points higher, while the MACD lies above both its zero and trigger lines, pointing north as well. Both indicators suggest increasing upside speed and corroborate our view for some further near-term advances in this exchange rate.
In order to abandon the bullish case, we would like to see a dip back below 1.6915. Such a move would turn the short-term picture back to a neutral one and may allow some further retreat. The next support to consider may be the 1.6865 barrier, which is near Tuesday’s inside swing high, the break of which may extend the decline towards yesterday’s low, at 1.6775. Having said all that though, in order to start considering a resumption of the prevailing bearish trend, we prefer to wait for a dip below that hurdle, as such a move would confirm a forthcoming lower low on the daily chart.