- During the early part of the session on Wednesday, we've seen the British pound rally quite nicely, but it has given back quite a bit of those gains as we continue to hang around the crucial 1.77 level.
- The question now, as we are starting to form a bit of an inverted hammer, is whether or not we can find some type of bounce here, which is what I would expect given enough time.
To be honest with you, with the way the day turned out, it looks less and less likely. That being said, we have not broken down below the support, so anything is possible at this juncture. But I also recognize that the 1.76 level might be interesting due to the fact that it was a swing high in the past, although just a minor area. It also features the 200-day EMA, so perhaps we are trying to get down to that area.
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If You are Bullish on Sterling
On the other hand, if you are bullish of the GBP/CAD, then what you are waiting on is a daily close above the 1.78 level now, as it would show a little bit of momentum, which is what this pair desperately needs at this juncture. I don't have any interest in trying to get overly big in my position here, and I am the first to admit that we are in an uptrend that hasn't changed. But the price action for the Wednesday session certainly puts a little bit of doubt into the validity of buying here. If we break down below the 200 day EMA, we could drop to the 1.75 level, perhaps even lower than that. On the upside though, we could go as high as 1.8150 and only match the double top that we had put in earlier this year, just a couple of scant months ago.
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