GBPCAD has been in selloff mode and has recently tumbled below support around the 1.7200-1.7300 levels. Price is finding support at 1.6800, though, and looks prime for a pullback to the area of interest.
Applying the Fibonacci retracement tool on the latest swing high and low shows that the broken support lines up with the 61.8% level. This also coincides with the dynamic resistance at the moving averages where more sellers might be waiting. RSI has a bit more room to climb, so price could follow suit and keep the correction going.
On the subject of moving averages, the 100 SMA is below the 200 SMA to indicate that the path of least resistance is to the downside or that the selloff is more likely to gain traction than to reverse. Stochastic is in the overbought zone to reflect exhaustion among buyers, and turning lower could confirm that sellers are taking control.
A shallow pullback could find sellers at the 38.2% Fib around 1.7100 or the 50% level closer to the 1.7200 major psychological mark. If any of these are able to keep gains in check, GBPCAD could retreat to the swing low or lower.
GBPCAD has been under downside pressure as Brexit issues are dragging sterling pairs lower. However, weaker crude oil prices early in the week and last week are weighing on the correlated Loonie as well.
A rebound in the commodity has been observed lately after the API reported a larger than expected draw in stockpiles. This could mean more gains for the Loonie moving forward, especially if the upcoming EIA report mirrors the API figures and if Canada’s retail sales data due later in the week surprise to the upside.
There are no major reports due from the UK economy next, so it could be all about CAD price action and overall market sentiment from here.