Technical Analysis – GBPCAD at 14-month high but outlook mixed
May 5, 2023 12:27 pm
GBPCAD stands a tad below the 14-month high of 1.7143, having broken the key 1.6862 level. The pair is testing the upper boundary of the Bollinger bands confirming the aggressiveness of the recent upleg. The bulls are naturally enjoying the current move and crave for another rally.
Should they manage to push the pair again above the 1.7080 level defined by October-November 2021 highs, they would set their eyes higher. More specifically, the February 21, 2022 and August 20, 2021 highs at 1.7385 and 1.7624 respectively will probably be the next targets.
However, the momentum indicators are more mixed than the bulls would have hoped. Both theAverage Directional Movement Index (ADX) and RSI are in bullish territory but appear to be toppy. In addition, the stochastic oscillator is potentially sending a double bearish message: a break below its overbought area seems to be on the cards and a bearish divergence is forming.
If the bears manage to take over the reins, their first target could be the November 4, 2022 upwards sloping trendline and the May 6, 2021 low at 1.6862. Even lower, the busy 1.6639-1.6767 area set by multiple GBPCAD lows and the 50-day simple moving average (SMA) could prove tougher to crack. The 100-day SMA at 1.6528 looks like the final obstacle until the 1.61 area.
To sum up, the bulls are probably feeling on top of the world after the higher high recorded. But the bears, with some help from the momentum indicators, appear ready to stage a comeback.
GBPCAD stands a tad below the 14-month high of 1.7143, having broken the key 1.6862 level. The pair is testing the upper boundary of the Bollinger bands confirming the aggressiveness of the recent upleg. The bulls are naturally enjoying the current move and crave for another rally.
Should they manage to push the pair again above the 1.7080 level defined by October-November 2021 highs, they would set their eyes higher. More specifically, the February 21, 2022 and August 20, 2021 highs at 1.7385 and 1.7624 respectively will probably be the next targets.
However, the momentum indicators are more mixed than the bulls would have hoped. Both the Average Directional Movement Index (ADX) and RSI are in bullish territory but appear to be toppy. In addition, the stochastic oscillator is potentially sending a double bearish message: a break below its overbought area seems to be on the cards and a bearish divergence is forming.
If the bears manage to take over the reins, their first target could be the November 4, 2022 upwards sloping trendline and the May 6, 2021 low at 1.6862. Even lower, the busy 1.6639-1.6767 area set by multiple GBPCAD lows and the 50-day simple moving average (SMA) could prove tougher to crack. The 100-day SMA at 1.6528 looks like the final obstacle until the 1.61 area.
To sum up, the bulls are probably feeling on top of the world after the higher high recorded. But the bears, with some help from the momentum indicators, appear ready to stage a comeback.
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