This range has buy & sell side liquidity that needs to be tackled. Ideally, I want to see a strong push above the consolidation into the order block marked before a reversal to the downside, as illustrated.
Looking on the 4 hour chart, GBPCAD has been selling off since Christmas Eve (24th December). We are currently trading in a significant support zone, which has been respected twice.
I think a short term buy position is a potential, using the Stochastic indicator and the Resistance Zone which are marked on my chart.
However, we will be swing trading a Short...
GBPCAD is currently testing a strong area of support and is also testing the lower channel of a descending channel. We have to reject this area on the H4 timeframe and we could be seeing a swing to the upside now for the pair to breakout of the channel and create some new highs at 1.75000 if we start to see some more GBP strength come into the markets.
Price broke support and created a resistance on smaller timeframes allowing us to enter sells, we secured our entries at 12 pips and moved stops to BE, price then retraced and would be in heavy drawdown if we didn't secure our profits. So overall we won the trade and managed it to perfection to ensure we didn't get caught out in that retracement.
We could potentially see GBPCAD declining aggressively now that it has gained liquidity after the resistance break and broken back into the ranging area. Let's see how this trade unfolds later on in the day, best of luck this week traders.
According to COT data source - 68% are short