- In my daily analysis of the British pound against the Canadian dollar, the first thing I see is that we have broken above the 50-day EMA.
- This is obviously a bullish sign, and I think it does open up the potential for a scenario where traders just simply look at this as a risk on versus risk off situation.
- This is essentially what all markets are doing at the moment, and therefore its not a huge surprise that we seeing it play out in this pair, right along with so many of the other more common markets.
Ultimately, I think you have to understand that the market has been very negative over the last couple of days, but it looks to me like we are doing everything we can to turn things around and continue the longer term of trend. With that being the case, breaking above the 50 day EMA does suggest that momentum is continuing and eventually we could go looking to the 1.7750 level.
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Anything above there then opens up the 1.7850 level, which of course is the recent swing high. Underneath we have the 1.74 level, which I think is going to be your support. Breaking that then opens up the possibility of dropping down to the 200 day EMA. All of that being said, this just looks like a typical pullback and a continuation play. One of my favorite ways to trade a trend. Granted,
I Must Assume the Trend is Still Valid
Sooner or later, these pullbacks end up being trend reversals, but I don't see that right now. Quite frankly, this is a scenario where I think you continue to see a lot of Canadian dollar weakness in general, as seen in other pairs, and it's just translating into the British pound doing better against it as well. At this juncture, I suspect that the buyers will continue to push to the upside and eventually try to get that swing high.
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