As a result of declines from the beginning of 2016, GBPCAD reached 1.6370, where on the beginning of this year occurred a bullish reaction. As a consequence of dynamic growth market reached local resistance area which coincided with a 38.2% Fibonacci correction from the entire previous downward movement, where a supply response occurred.
Looking on daily chart we will notice that as a result of ongoing from May declines market broke bullish trend resistance and reached local support where demand response occurred. Permanent rejection of this level could be a signal for a rebound for which the closest significant resistance appears to be the area between:
- 38.2% of the Fibonacci correction from the entire downward movement
- 50% of Fibonacci correction from last bearish impulse
It is also worth noting that this zone coincides with ascending trend line.
On H1 we notice that dynamics of current increases are significantly lower than compared to recent drops. It may be a sign that current upward channel is only a correction after which we can expect declines again.