October 25, 2021 15:15:40
GBP/CAD consolidation around 1.70
Since topping out around the 1.76 barrier through the summer on a few occasions, GBP/CAD has fallen sharply through trendline support and long-term averages. The July low at 1.7012 was broken at the start of this month and the pair moved below the April lows too, around 1.6953.
We had a bullish reversal signal on October 15 with an outside range day after printing a cycle low at 1.6892. Prices may have based here as they have done several times since early 2020. But the move higher has paused around the July low with near-term resistance at 1.7086.
If GBP can pick up support above the 21-day SMA, bulls will look for 1.71 and beyond. But the oversold conditions have now eased so we could just be in bearish consolidation mode. This means rolling over soon back towards a test of the base again.
GBP/AUD descending channel remains intact
This pair topped out in August at 1.9154 which was the halfway mark of the March 2020 to January 2021 move. Since then, we’ve fallen below 1.86 before heading back to the July high at 1.8972. This proved strong resistance and the bears have been in control since.
A neat, descending bear channel has formed with a series of lower highs and lower lows. The 50-day and 100-day SMAs have been pierced. Last week’s bottom got very close to the widely watched 200-day SMA at 1.8317 before rebounding.
Oversold conditions have moderated, which means sellers may now retest the long-term SMA again. Below here is the 23.6% Fib level at 1.8241. Prices will need to get back above 1.86 to arrest the bearish momentum.
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