GBPCAD is currently trading not too far away from yesterday’s 20-month low of 1.6572, having pulled back marginally. The momentum indicators suggest that there is a potential for an upside correction. The RSI, which has been moving around its 30 level over the last month, is pointing up in the oversold area, while the stochastic oscillator is looking for a bullish cross below the 20 level.
If the price fails to hold today’s positive momentum, falling below the 1.6572 bottom, the 1.6340 support level, taken from the low on October 2017, could attract traders’ attention as there is no significant obstacle before that barrier.
On the other side, if the market continues recovery above 1.6590, resistance could next be detected around the December low of 1.6700. Should the price overcome this handle, the spotlight will shift to the 20-day simple moving average (SMA), currently at 1.6830, and the 23.6% Fibonacci mark of the downfall from 1.7795 to 1.6572, near 1.6860.
Overall, GBPCAD has been developing in a downtrend over the past two months and thus the view is still negative. There is a scope for an upside retracement in the short-term but only a daily close above the 200-SMA could shift the medium-term outlook to bullish.