GBP/CAD Tests Key Support: Is a Bullish Reversal on the Horizon?
15 January 2025
In today’s technical analysis, we’re focusing on the British Pound to Canadian Dollar (GBP/CAD), which has been experiencing a heavy drop since mid-December. This decline, however, appears to have reached a temporary support level, marked in green around 1.747. This level corresponds to the lows from late November and has already been tested three times this week. Each test resulted in a reversal, albeit a temporary one, suggesting that the support is currently holding firm.
Early Signs of a Reversal
Although the price is still forming lower lows and lower highs, indicating a bearish trend, the repeated bounces off the green support level raise the possibility of a bullish reversal. It’s still too early to enter a long position, as the market structure hasn’t shifted yet. However, if the price breaks above the first red resistance, it would mark the formation of a higher high, signaling a potential change in the trend. This breakout would act as an invitation to go long, with the upper red resistance serving as a promising target for buyers.
Bearish Scenario
Conversely, a daily close below the green support would invalidate the bullish scenario and provide a strong signal to sell, opening the door for further downside movement. However, given the current price action, the chances of breaking this support appear limited for now.
Key Levels to Watch