Breaking trend line now confirms we could see further drops to the 200 EMA. GBP/CAD may retest the trend line for optimal entry to short.

GBP/CAD

Daily chart hovering between the 50 and 200 EMA. 1.71685 is a crucial zone that will indicate where GBP/CAD will likely trend towards.


GBP/CAD

 

Key Points:

  • Price holding above the 200 EMA
  • Price holding above the 50 EMA
  • Crossed daily trend line
  • Retest of trend line will need a bearish candle reversal to signal entry.

 

Key Levels:

Support – 50 EMA, 200 EMA, 1.71000, 1.70000, 1.69025

Resistance – 1.71685, 1.72400

 

Entry Zone:

Optimal entry provides the greatest reward to risk ratio while supporting entry is a zone for reversal signals.

Optimal Entry – 1.72000

Supporting Entry – 1.71700

 

Candle Reversals for entry

  • Bearish Shooting Star
  • Bearish Engulfing
  • Bearish Dark Cloud CoverBearish Candlesticks

The Risk:

As traders, it is your job to mitigate the risk and only trade structures that provide high probability and great reward to risk ratios.

If you are not comfortable with defined exit levels, experiment with Moving Averages to help set solid exit rules to protect your capital.

IF: Price breaks above 1.72563 level – this would suggest the structure is not in our favour and would be wise to reduce exposure or close the trade until a solid signal gives us reasons to re-enter.

Reward / Reward Targets:

Optimal Entry 1.72000 – Target 1 1.70000 = 3.3x Reward to Risk

Optimal Entry 1.72000 – Target 2 1.69025 = 5x Reward to Risk

Supporting Entry 1.71700 – Target 1 1.70000 = 2x Reward to Risk

Supporting Entry 1.71700– Target 2 1.69025 = 3x Reward to Risk