GBPCAD posted an aggressive upside session on Wednesday, surpassing the 20- and 40-simple moving averages (SMAs) in the daily timeframe and gaining more than 200 pips. The price hit an almost one-month high today of 1.7295.
Looking at momentum indicators, the RSI is moving north in the positive territory, approaching the 70 level, while the %K line of the stochastic entered the overbought zone. The MACD also supports this view as it is holding in the negative area but is currently embraced by its red trigger line.
Should the pair manage to strengthen its positive momentum, the next resistance could come around the 23.6% Fibonacci retracement level of the bullish move from the 23-month low of 1.5875 to the nine-month high of 1.7790, near 1.7340. A break above this mark would shift the bias to a more bullish one and open the way towards the next resistance of 1.7725, identified by the peak on May 2019. Above this level, the next target could come from the nine-month high of 1.7790.
However, if prices are unable to break into the upper surface of the Ichimoku cloud in the next few sessions, the risk would shift to the downside, with the 1.7210 – 1.7060 support zone coming into focus, which encapsulates the 1.7125 support and the 38.2% Fibo. The next key support to watch lower down is 1.6920, penetrating to the downside of the medium-term rising trend line.
In the bigger picture, the pair is bullish as long as it holds above the SMAs and the diagonal line. In case it violates this line, bears could take the upper hand.
