NZDUSD Potential Top in Place, Awaiting Confirmation

NZDUSD Potential Top in Place, Awaiting Confirmation

Over the weekend I mentioned the possibility that NZDUSD had put in a near-term top with last week’s false break above channel resistance, a level that intersects with two prominent lows from February and March of last year.

In addition to the false break, last Friday’s post-Brexit plunge resulted in a massive 330 pip bearish engulfing candle. This formation along with the false break of the 0.7180 handle suggested that downside pressure would persist.
However, the kiwi has once again shown resilience in the face of what began as a gruesome scene amid last week’s referendum. After gapping down to start the new week, the risk-sensitive pair has bounced back 154 pips from the 0.6986 handle with today’s high reaching 0.7140.
But despite this recent strength, NZDUSD has barely managed to breach last week’s close at 0.7120. While there’s plenty of time for that to change, the intraday charts are beginning to indicate that this rally may be running on fumes.
The 1-hour chart below tells the story.

 

The ascending channel above could very well be a sign of near-term exhaustion after Friday’s meltdown across risk assets. An ascending formation that follows a sharp move lower is most often considered a bearish continuation pattern.
Does that mean a close below support would be tradable on its own?
Perhaps, but I believe that a far more robust opportunity would materialize with a daily close below 0.6986. This level has served as support on several occasions since mid-June and could, therefore, signal a material weakness in the pair should the level fall in the coming sessions.
What’s interesting about this potential move is that at 314 pips, the range between 0.6986 and last week’s high of 0.7300 is nearly identical to the distance from 0.6986 to the May low of 0.6675. In fact, only three pips separate the two.
However, as of now, this is all just an idea and one that requires more time to develop before it can be considered an actionable trade setup. click here:

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GBPAUD: A Little Patience Could Go a Long Way

GBPAUD:

One of the harder aspects of trading is having the patience necessary to wait days or even weeks for a particular trade idea to fully materialize. A great example is that of the recent price action on GBPAUD following last week’s Brexit vote.

Any time a currency pair moves 1,600 pips in a single session, all of the “greed” receptors in the brain come alive while imagining all of the money that you could have made. Sure, a ton of money was lost too, but our brains don’t like to think about that.
Then the fear of missing out sets in – what if you miss the next 1,600-pip move?
But to profit consistently, especially in a market this volatile, greed and fear need to pipe down. These emotions have no business being in our head because everything we do is cold and calculated and is certainly not based on emotional triggers.
As for GBPAUD, a little patience could go a long way in allowing the pair to produce an opportunity worth the associated risk.
But three things need to happen first:

1. More time for the markets to digest last week’s shake-up
2. A reversion to the mean (10 and 20 EMAs)
3. Retest of former support as new resistance

The new resistance level in question is 1.8350, which is a key pivot dating back to 2009 and is also the 50% Fibonacci retracement from the 2013 low at 1.4380 to the 2015 high at 2.2370.
With the right bearish signal, a retest of this area could trigger the next leg down toward the 1.7430 support level. This area played a critical role as resistance in the second half of 2013 and later served as support in 2014. It’s also the 61.8 Fibonacci level when measuring from the two points mentioned above.
In summary, GBPAUD needs a bit more time to digest the recent volatility, but any further recovery from current levels could falter at the 1.8350 handle.

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Brexit Puts the Glitter in Gold

    Brexit Puts the Glitter in Gold

Brexit Puts the Glitter in Gold

As the United Kingdom’s surprise vote to leave the European Union sent financial markets into a risk-on sell-off, investors flocked to the world’s oldest safe haven: gold. The price of the yellow metal rose 6 percent from a low of $1,256.50 an ounce on June 23, the day of the referendum, to a high of $1,336.88 on June 24, blowing through two key technical thresholds of $1,304 per ounce and $1,333 per ounce along the way. Technical analysts on Credit Suisse’s Global Markets team say prices are likely to keep rising from here, ultimately reaching $1,380 an ounce, which would be a two-year high. Precious metals analysts on the Global Markets team note that the uncertain macroeconomic environment, currency volatility, lower yields in the developed world, and the potential for additional quantitative easing from central banks create nearly ideal conditions for a bull market rally, and that the sense of global unease pushing gold prices higher is likely to continue through the U.S. elections in November. While gold exchange-traded funds have added 14.2 million ounces of gold to their holdings so far in 2016, the 61.2 million ounces in their vaults would have to increase 38 percent to reach the peak of 84.62 million ounces in 2012. In other words, there are plenty of reasons the gold rally may have further to run.

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As the United Kingdom’s surprise vote to leave the European Union sent financial markets into a risk-on sell-off, investors flocked to the world’s oldest safe haven: gold. The price of the yellow metal rose 6 percent from a low of $1,256.50 an ounce on June 23, the day of the referendum, to a high of $1,336.88 on June 24, blowing through two key technical thresholds of $1,304 per ounce and $1,333 per ounce along the way. Technical analysts on Credit Suisse’s Global Markets team say prices are likely to keep rising from here, ultimately reaching $1,380 an ounce, which would be a two-year high. Precious metals analysts on the Global Markets team note that the uncertain macroeconomic environment, currency volatility, lower yields in the developed world, and the potential for additional quantitative easing from central banks create nearly ideal conditions for a bull market rally, and that the sense of global unease pushing gold prices higher is likely to continue through the U.S. elections in November. While gold exchange-traded funds have added 14.2 million ounces of gold to their holdings so far in 2016, the 61.2 million ounces in their vaults would have to increase 38 percent to reach the peak of 84.62 million ounces in 2012. In other words, there are plenty of reasons the gold rally may have further to run. - See more at: https://www.thefinancialist.com/spark/brexit-puts-the-glitter-in-gold/?utm_source=Newsletter&utm_medium=email&utm_campaign=Newsletter&utm_content=Newsletter#sthash.GO5zmzLQ.dpuf

EURNZD: Further Losses Likely Below 1.5840

EURNZD :

Aside from the sheer volatility that last week’s EU referendum caused, it did something much more meaningful and helpful for the traders who remained patient.

The aftermath of the event revealed where the real opportunities lie. It shed light on markets that had made false breaks ahead of the vote and at the same time offered follow through to others.
Take Thursday’s GBPUSD close above 1.4740 as one example of a false break. Another example would be NZDUSD closing above the 0.7180 area just hours before the panic selling began, which triggered a 330 pip landslide.
Alternatively, we have a pair like EURNZD where post-Brexit fears offered a high degree of follow through to the break that occurred on Tuesday of last week.
Which break am I referring to, exactly?
The daily close below the 1.5840 handle. I mentioned this area in the weekly forecast from two weeks ago. Unfortunately for us, the move below critical support came just 48 hours ahead of last Thursday’s vote on whether the UK would leave the European Union, making it unwise to take on Euro exposure beforehand.
On top of that, the 1.5840 level was retested as new resistance in the midst of the chaos that consumed the final 24 hours of trade last week, which was hardly an environment conducive to trading.
But with a new week comes fresh opportunity. The markets have had some time to settle into their new positions, making it a less risky endeavor to trade currencies like the Euro or even British pound.
To be clear, I am by no means implying that it will be smooth sailing from here. An event as momentous as last week’s Brexit is sure to send shockwaves throughout the financial markets for weeks and months to come.
With this in mind, correctly timed entries and scaling risk accordingly are of the utmost importance. And with the right amount of diligence, I believe the latter half of 2016 could offer some of the best opportunities since the first four weeks of the year.
As for EURNZD, today’s consolidation is a hint that further losses are likely toward 1.5400 with a break below that targeting 1.50.
But again, to not only survive these volatile conditions but to prosper requires saint-like patience and an obsessive attention to risk control.

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EURUSD Breaks Key Support, Targets March 10th ECB Low

EURUSD Breaks Key Support, Targets March 10th ECB Low.

Over the weekend I mentioned the idea that a EURUSD daily close below 1.1060 would open the door to the potential for further weakness toward 1.0820, commonly referred to as the March 10th ECB low.

Not surprisingly, yesterday’s session picked up where Friday left off, putting the single currency below the 1.1060 handle against the US dollar.
For those who missed the Sunday commentary, the 1.1060 level is important for two distinct reasons:

1. It has acted as a key pivot since March of 2015
2. It’s the 50% Fibonacci retracement from the December 2015 low of 1.0515 to the 2016 high of 1.1615

Yesterday’s close should help fuel the recent bearish momentum caused by last week’s Brexit.
But as I also pointed out over the weekend, it’s important not to chase a market that has overextended itself, which could be the case with EURUSD. The pair is currently trading 160 pips below the 10 EMA on the daily chart, signaling that further consolidation may be necessary before sellers are willing to commit to another leg down.
I’ll continue to favor selling the Euro against the USD so long as the pair remains below 1.1060 on a daily closing basis. From here, there isn’t much standing in the way of a retest of the March 10th ECB low of 1.0820 with a break there exposing 1.0710 (minor support) followed by the current 2016 low of 1.0515.
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Brexit It Is

                                                  Brexit It Is

 

The British people spoke in the June 23 referendum, voting by a margin of 52 percent to 48 percent to leave the European Union. For now, the Brexit vote raises more questions than it answers. The only other time a country has left the EU was in 1985, when Greenland exited six years after gaining independence from Denmark. Given the relative size of the economies involved and the integration over the intervening three decades, that was obviously quite a different matter. The first question facing the post-Brexit world is when exactly a break with the European Union will happen—or if it will happen at all. To leave the EU, a country has to trigger Article 50 of the Treaty of Lisbon by formally announcing that it wishes to leave, which then triggers a two-year negotiation over the terms of its exit. If no agreement can be reached in two years, the country must leave immediately unless EU members unanimously vote to continue negotiations. When exactly the United Kingdom will decide to invoke Article 50 is unclear, particularly since Prime Minister David Cameron vowed to leave the decision to his successor when he announced his resignation on June 24. Cameron said he will continue to serve for the next three months to allow time for his Conservative Party to decide who should replace him.The second question is how the vote in the U.K. will affect both domestic and regional politics, and, in particular, whether it will strengthen euroskeptic movements in other countries or even prompt more referendums. There will be plenty of opportunities to find out: Scotland voted to remain in the European Union, raising the specter of another independence vote, Spain will hold a general election June 26, Italy is planning a constitutional referendum in fall, and France and Germany have elections in 2017. Finally, the length, breadth, and exact nature of the market shock that is already underway remain to be seen.

Stay tuned to The Financialist in the days ahead for full coverage of the impact of the United Kingdom’s historic Brexit vote.
- See more at: https://www.thefinancialist.com/spark/brexit-it-is/?utm_source=Newsletter&utm_medium=email&utm_campaign=Newsletter&utm_content=Newsletter#sthash.q2uRzmbZ.dpuf

The British people spoke in the June 23 referendum, voting by a margin of 52 percent to 48 percent to leave the European Union. For now, the Brexit vote raises more questions than it answers. The only other time a country has left the EU was in 1985, when Greenland exited six years after gaining independence from Denmark. Given the relative size of the economies involved and the integration over the intervening three decades, that was obviously quite a different matter. The first question facing the post-Brexit world is when exactly a break with the European Union will happen—or if it will happen at all. To leave the EU, a country has to trigger Article 50 of the Treaty of Lisbon by formally announcing that it wishes to leave, which then triggers a two-year negotiation over the terms of its exit. If no agreement can be reached in two years, the country must leave immediately unless EU members unanimously vote to continue negotiations. When exactly the United Kingdom will decide to invoke Article 50 is unclear, particularly since Prime Minister David Cameron vowed to leave the decision to his successor when he announced his resignation on June 24. Cameron said he will continue to serve for the next three months to allow time for his Conservative Party to decide who should replace him.The second question is how the vote in the U.K. will affect both domestic and regional politics, and, in particular, whether it will strengthen euroskeptic movements in other countries or even prompt more referendums. There will be plenty of opportunities to find out: Scotland voted to remain in the European Union, raising the specter of another independence vote, Spain will hold a general election June 26, Italy is planning a constitutional referendum in fall, and France and Germany have elections in 2017. Finally, the length, breadth, and exact nature of the market shock that is already underway remain to be seen.

Stay tuned to The Financialist in the days ahead for full coverage of the impact of the United Kingdom’s historic Brexit vote.
- See more at: https://www.thefinancialist.com/spark/brexit-it-is/?utm_source=Newsletter&utm_medium=email&utm_campaign=Newsletter&utm_content=Newsletter#sthash.q2uRzmbZ.dpuf

 

The British people spoke in the June 23 referendum, voting by a margin of 52 percent to 48 percent to leave the European Union. For now, the Brexit vote raises more questions than it answers. The only other time a country has left the EU was in 1985, when Greenland exited six years after gaining independence from Denmark. Given the relative size of the economies involved and the integration over the intervening three decades, that was obviously quite a different matter. The first question facing the post-Brexit world is when exactly a break with the European Union will happen—or if it will happen at all. To leave the EU, a country has to trigger Article 50 of the Treaty of Lisbon by formally announcing that it wishes to leave, which then triggers a two-year negotiation over the terms of its exit. If no agreement can be reached in two years, the country must leave immediately unless EU members unanimously vote to continue negotiations. When exactly the United Kingdom will decide to invoke Article 50 is unclear, particularly since Prime Minister David Cameron vowed to leave the decision to his successor when he announced his resignation on June 24. Cameron said he will continue to serve for the next three months to allow time for his Conservative Party to decide who should replace him.The second question is how the vote in the U.K. will affect both domestic and regional politics, and, in particular, whether it will strengthen euroskeptic movements in other countries or even prompt more referendums. There will be plenty of opportunities to find out: Scotland voted to remain in the European Union, raising the specter of another independence vote, Spain will hold a general election June 26, Italy is planning a constitutional referendum in fall, and France and Germany have elections in 2017. Finally, the length, breadth, and exact nature of the market shock that is already underway remain to be seen.

Stay tuned to The Financialist in the days ahead for full coverage of the impact of the United Kingdom’s historic Brexit vote.

The British people spoke in the June 23 referendum, voting by a margin of 52 percent to 48 percent to leave the European Union. For now, the Brexit vote raises more questions than it answers. The only other time a country has left the EU was in 1985, when Greenland exited six years after gaining independence from Denmark. Given the relative size of the economies involved and the integration over the intervening three decades, that was obviously quite a different matter. The first question facing the post-Brexit world is when exactly a break with the European Union will happen—or if it will happen at all. To leave the EU, a country has to trigger Article 50 of the Treaty of Lisbon by formally announcing that it wishes to leave, which then triggers a two-year negotiation over the terms of its exit. If no agreement can be reached in two years, the country must leave immediately unless EU - See more at: https://www.thefinancialist.com/spark/brexit-it-is/?utm_source=Newsletter&utm_medium=email&utm_campaign=Newsletter&utm_content=Newsletter#sthash.q2uRzmbZ.dpuf

The British people spoke in the June 23 referendum, voting by a margin of 52 percent to 48 percent to leave the European Union. For now, the Brexit vote raises more questions than it answers. The only other time a country has left the EU was in 1985, when Greenland exited six years after gaining independence from Denmark. Given the relative size of the economies involved and the integration over the intervening three decades, that was obviously quite a different matter. The first question facing the post-Brexit world is when exactly a break with the European Union will happen—or if it will happen at all. To leave the EU, a country has to trigger Article 50 of the Treaty of Lisbon by formally announcing that it wishes to leave, which then triggers a two-year negotiation over the terms of its exit. If no agreement can be reached in two years, the country must leave immediately unless EU - See more at: https://www.thefinancialist.com/spark/brexit-it-is/?utm_source=Newsletter&utm_medium=email&utm_campaign=Newsletter&utm_content=Newsletter#sthash.q2uRzmbZ.dpuf

The British people spoke in the June 23 referendum, voting by a margin of 52 percent to 48 percent to leave the European Union. For now, the Brexit vote raises more questions than it answers. The only other time a country has left the EU was in 1985, when Greenland exited six years after gaining independence from Denmark. Given the relative size of the economies involved and the integration over the intervening three decades, that was obviously quite a different matter. The first question facing the post-Brexit world is when exactly a break with the European Union will happen—or if it will happen at all. To leave the EU, a country has to trigger Article 50 of the Treaty of Lisbon by formally announcing that it wishes to leave, which then triggers a two-year negotiation over the terms of its exit. If no agreement can be reached in two years, the country must leave immediately unless EU - See more at: https://www.thefinancialist.com/spark/brexit-it-is/?utm_source=Newsletter&utm_medium=email&utm_campaign=Newsletter&utm_content=Newsletter#sthash.q2uRzmbZ.dpuf

The British people spoke in the June 23 referendum, voting by a margin of 52 percent to 48 percent to leave the European Union. For now, the Brexit vote raises more questions than it answers. The only other time a country has left the EU was in 1985, when Greenland exited six years after gaining independence from Denmark. Given the relative size of the economies involved and the integration over the intervening three decades, that was obviously quite a different matter. The first question facing the post-Brexit world is when exactly a break with the European Union will happen—or if it will happen at all. To leave the EU, a country has to trigger Article 50 of the Treaty of Lisbon by formally announcing that it wishes to leave, which then triggers a two-year negotiation over the terms of its exit. If no agreement can be reached in two years, the country must leave immediately unless EU - See more at: https://www.thefinancialist.com/spark/brexit-it-is/?utm_source=Newsletter&utm_medium=email&utm_campaign=Newsletter&utm_content=Newsletter#sthash.q2uRzmbZ.dpuf

The British people spoke in the June 23 referendum, voting by a margin of 52 percent to 48 percent to leave the European Union. For now, the Brexit vote raises more questions than it answers. The only other time a country has left the EU was in 1985, when Greenland exited six years after gaining independence from Denmark. Given the relative size of the economies involved and the integration over the intervening three decades, that was obviously quite a different matter. The first question facing the post-Brexit world is when exactly a break with the European Union will happen—or if it will happen at all. To leave the EU, a country has to trigger Article 50 of the Treaty of Lisbon by formally announcing that it wishes to leave, which then triggers a two-year negotiation over the terms of its exit. If no agreement can be reached in two years, the country must leave immediately unless EU - See more at: https://www.thefinancialist.com/spark/brexit-it-is/?utm_source=Newsletter&utm_medium=email&utm_campaign=Newsletter&utm_content=Newsletter#sthash.q2uRzmbZ.dpuf

The British people spoke in the June 23 referendum, voting by a margin of 52 percent to 48 percent to leave the European Union. For now, the Brexit vote raises more questions than it answers. The only other time a country has left the EU was in 1985, when Greenland exited six years after gaining independence from Denmark. Given the relative size of the economies involved and the integration over the intervening three decades, that was obviously quite a different matter. The first question facing the post-Brexit world is when exactly a break with the European Union will happen—or if it will happen at all. To leave the EU, a country has to trigger Article 50 of the Treaty of Lisbon by formally announcing that it wishes to leave, which then triggers a two-year negotiation over the terms of its exit. If no agreement can be reached in two years, the country must leave immediately unless EU - See more at: https://www.thefinancialist.com/spark/brexit-it-is/?utm_source=Newsletter&utm_medium=email&utm_campaign=Newsletter&utm_content=Newsletter#sthash.q2uRzmbZ.dpuf

The British people spoke in the June 23 referendum, voting by a margin of 52 percent to 48 percent to leave the European Union. For now, the Brexit vote raises more questions than it answers. The only other time a country has left the EU was in 1985, when Greenland exited six years after gaining independence from Denmark. Given the relative size of the economies involved and the integration over the intervening three decades, that was obviously quite a different matter. The first question facing the post-Brexit world is when exactly a break with the European Union will happen—or if it will happen at all. To leave the EU, a country has to trigger Article 50 of the Treaty of Lisbon by formally announcing that it wishes to leave, which then triggers a two-year negotiation over the terms of its exit. If no agreement can be reached in two years, the country must leave immediately unless EU members unanimously vote to continue negotiations. When exactly the United Kingdom will decide to invoke Article 50 is unclear, particularly since Prime Minister David Cameron vowed to leave the decision to his successor when he announced his resignation on June 24. Cameron said he will continue to serve for the next three months to allow time for his Conservative Party to decide who should replace him.The second question is how the vote in the U.K. will affect both domestic and regional politics, and, in particular, whether it will strengthen euroskeptic movements in other countries or even prompt more referendums. There will be plenty of opportunities to find out: Scotland voted to remain in the European Union, raising the specter of another independence vote, Spain will hold a general election June 26, Italy is planning a constitutional referendum in fall, and France and Germany have elections in 2017. Finally, the length, breadth, and exact nature of the market shock that is already underway remain to be seen.

Stay tuned to The Financialist in the days ahead for full coverage of the impact of the United Kingdom’s historic Brexit vote.
- See more at: https://www.thefinancialist.com/spark/brexit-it-is/?utm_source=Newsletter&utm_medium=email&utm_campaign=Newsletter&utm_content=Newsletter#sthash.q2uRzmbZ.dpuf

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The British people spoke in the June 23 referendum, voting by a margin of 52 percent to 48 percent to leave the European Union. For now, the Brexit vote raises more questions than it answers. The only other time a country has left the EU was in 1985, when Greenland exited six years after gaining independence from Denmark. Given the relative size of the economies involved and the integration over the intervening three decades, that was obviously quite a different matter. The first question facing the post-Brexit world is when exactly a break with the European Union will happen—or if it will happen at all. To leave the EU, a country has to trigger Article 50 of the Treaty of Lisbon by formally announcing that it wishes to leave, which then triggers a two-year negotiation over the terms of its exit. If no agreement can be reached in two years, the country must leave immediately unless EU members unanimously vote to continue negotiations. When exactly the United Kingdom will decide to invoke Article 50 is unclear, particularly since Prime Minister David Cameron vowed to leave the decision to his successor when he announced his resignation on June 24. Cameron said he will continue to serve for the next three months to allow time for his Conservative Party to decide who should replace him.The second question is how the vote in the U.K. will affect both domestic and regional politics, and, in particular, whether it will strengthen euroskeptic movements in other countries or even prompt more referendums. There will be plenty of opportunities to find out: Scotland voted to remain in the European Union, raising the specter of another independence vote, Spain will hold a general election June 26, Italy is planning a constitutional referendum in fall, and France and Germany have elections in 2017. Finally, the length, breadth, and exact nature of the market shock that is already underway remain to be seen.

Stay tuned to The Financialist in the days ahead for full coverage of the impact of the United Kingdom’s historic Brexit vote.
- See more at: https://www.thefinancialist.com/spark/brexit-it-is/?utm_source=Newsletter&utm_medium=email&utm_campaign=Newsletter&utm_content=Newsletter#sthash.q2uRzmbZ.dpuf

 

 

 

 

 

Brexit It Is

Weekly Forex Forecast (June 27 – July 1, 2016)

EURUSD broke below a key technical level last week on the back of the UK fallout from the EU. I have had my eye on this area for several weeks now and commented on the breakout during Friday’s session.

From here I’d like to see a daily close below the 1.1060 handle before considering a short position. This level has served as a key pivot since early 2015 and is also the 50% Fibonacci retracement when measuring from the December 2015 low at 1.0515 to the 2016 high at 1.1615.
As I mentioned last week, a daily close below 1.1060 would expose the March 10th ECB low of 1.0820 with a break there opening the door for a retest of the current 2016 low at 1.0515.
In summary, I favor selling into Euro strength so long as the pair remains below the 1.1140 area on a daily closing basis.

GBPUSD made its mark on history last week. After the somewhat surprising conclusion to the EU referendum with the “leave” camp winning the day, the British pound lost a staggering 1,800 pips in a matter of hours.
The truth is, the final vote didn’t cause most of the damage. The majority of selling commenced as soon as the results were released from what were thought to be pro-remain areas showing that “leave” was in front by a considerable margin.
But that was then, and this is now. And before trading a market this volatile and overextended (at the moment), it’s important to allow the market to come to you, not the other way around.
As far as where the pair might find resistance in the week ahead, we don’t have to look any further than the former 2016 swing low at 1.3834.
Based on Friday’s close, the next level that might attract a bid is the 2009 low at 1.3500. A move below this area, which is likely in my opinion, would expose levels that haven’t been seen since 1986, which was the case for a brief period on Friday.

Friday’s flight to safety put AUDUSD back below the key 0.7490 handle. The pair had previously broken above this level the day before the much-anticipated referendum, but like any other risk-sensitive pairing, the Aussie wasn’t able to sustain former gains.
The bearish engulfing pattern and close back below 0.7490 expose channel support that extends from the current 2016 low at 0.6827.
If we should see channel support give way along with the May lows of 0.7160, there wouldn’t be much standing in the way of a retest of 0.6827.

NZDUSD is one of my preferred currency pairs to sell on the back of last week’s Brexit. After respecting channel resistance for several days, the kiwi made a key technical break above the level last Thursday.
However, by the end of Friday’s post-Brexit selling, the pair was trading back below the resistance level, signaling that Thursday’s rally was nothing more than a false break.
The strength shown by the kiwi in the latter half of Friday’s session was a bit surprising. After being down 270 pips on the day, the pair managed to claw back 150 of those pips before the weekend.
With that said, the large bearish engulfing candle and the close back below channel resistance are indications that Friday’s afternoon bounce was nothing more than profit taking before the weekend.
I remain bearish here as long as the 0.7180 area holds as resistance on a daily closing basis.

Last week’s selloff in the British pound also led to a confirmed reversal pattern on the GBPCAD weekly chart. I mentioned this price structure in the last weekly forecast as one to watch should Brexit be the outcome of the referendum.
With the pair ending the week well below the neckline of the head and shoulders pattern you see below, the path of least resistance remains to the downside.
What is unclear at the moment, however, is whether or not we see enough profit taking to cause a retest of the 1.8150 handle as new resistance. A daily close below the 1.7540 area would be an indication that such a retest is unlikely. In which case, traders may have to settle for a lower entry to catch a move toward the measured objective near 1.5300.
But like I mentioned above on GBPUSD, it’s important not to chase this or any currency pair. And considering GBPCAD is currently 800 pips away from the 10 EMA, chances remain high that we’ll see a relief rally of some sort before the next leg down materializes.

 

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