Technical Analysis – GBPCAD remains inside the rectangle; recent pullback might have legs
June 30, 2023 1:28 pm
GBPCAD returned inside the rectangle that has been affecting the price action since December 2022. The third upward breakout proved false again, with the bulls scratching their heads about the correct set-up that could finally help them stage a strong rally. In the meantime, historical performance is pointing to a probable retest of the lower boundary of the rectangle structure, despite the muted momentum indicators.
GBPCAD appears to be stuck between the 50- and 100-day simple moving averages (SMAs) with the Average Directional Movement Index (ADX) confirming this range-trading period. With the RSI hovering around its 50-midpoint, the stochastic oscillator is testing the resistance set by its own moving average. The stochastic’s next move could determine the next short-term trend.
Should the bears feel confident, they would try to quickly break the 100-day SMA at 1.6704 and the lower boundary of the rectangle at 1.6589. If successful, they would have the chance of staging the first bearish breakout since April 17, 2023. Even lower, the 200-day SMA could prove a stronger hurdle than currently expected by the bears.
On the flip side, the bulls would like another bullish breakout despite their recent failures. They first have to clear the busy 1.6832-1.6862 range that is populated by the May 6, 2021 low, the 50-day SMA and the upper boundary of the aforementioned rectangle. This area is key to market sentiment, and if successfully broken, a decisive move above the 1.7080 range is necessary to avoid talk of another false breakout.
To sum up, GBPCAD bears are anxiously trying to engineer a retest of the lower boundary of the rectangle, taking advantage of the indecisiveness seen at the bulls’ camp following the repeated breakout failures.
GBPCAD returned inside the rectangle that has been affecting the price action since December 2022. The third upward breakout proved false again, with the bulls scratching their heads about the correct set-up that could finally help them stage a strong rally. In the meantime, historical performance is pointing to a probable retest of the lower boundary of the rectangle structure, despite the muted momentum indicators.
GBPCAD appears to be stuck between the 50- and 100-day simple moving averages (SMAs) with the Average Directional Movement Index (ADX) confirming this range-trading period. With the RSI hovering around its 50-midpoint, the stochastic oscillator is testing the resistance set by its own moving average. The stochastic’s next move could determine the next short-term trend.
Should the bears feel confident, they would try to quickly break the 100-day SMA at 1.6704 and the lower boundary of the rectangle at 1.6589. If successful, they would have the chance of staging the first bearish breakout since April 17, 2023. Even lower, the 200-day SMA could prove a stronger hurdle than currently expected by the bears.
On the flip side, the bulls would like another bullish breakout despite their recent failures. They first have to clear the busy 1.6832-1.6862 range that is populated by the May 6, 2021 low, the 50-day SMA and the upper boundary of the aforementioned rectangle. This area is key to market sentiment, and if successfully broken, a decisive move above the 1.7080 range is necessary to avoid talk of another false breakout.
To sum up, GBPCAD bears are anxiously trying to engineer a retest of the lower boundary of the rectangle, taking advantage of the indecisiveness seen at the bulls’ camp following the repeated breakout failures.
Related Posts: