Gbpcad Shows Bearish Divergence

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Gbpcad Shows Bearish Divergence

Gbp/Cad Shows Signs Of Bearish Divergence

GBP/CAD is in a rising price channel and is now edging close to the upper limit of the channel. This means the GBP/CAD is now close to a strong resistance, which means a leg lower is now on the cards.

Once the GBP/CAD has moved lower, the next possible move will be higher, provided that the cross remains in its bullish channel.

Macd Hints At Leg Lower

If we look at the MACD indicator on the GBP/CAD chart, it also shows that the cross is going through a bearish divergence. So, while the price of GBP/CAD has been rising higher, the MACD is actually printing lower bars.

This is a classic example of bearish divergence and is a sign that the GBP/CAD will soon move lower, similar to the MACD. Right now, the chance of a pullback in GBP/CAD is now higher than ever!

When combining the risk of bearish divergence with the fact that GBP/CAD is now close to the upper limit of the channel, the path of least resistance is now on the way down.

On the way down, the first target for the GBP/CAD will be 1.7733, where the 50 SMA is located. Once the GBP/CAD has pulled back to this level, we may see another leg higher.

However, the price of GBP/CAD is not showing any reversal patterns yet, which means caution is needed at this stage. If the GBP/CAD price shows a reversal pattern, such as Bearish Engulfing or Shooting Star, it will further reinforce the prospects of a move lower.

Although the US Central Bank decision tomorrow is not directly related to the GBP/CAD, we can't completely ignore it as well. Any big moves by the US central bank will share all the FX pairs, and GBP/CAD will be no exception.

Besides the technical moves, any economic releases from the Canada and the United Kingdom will also effect the GBP/CAD price.

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