GBPCAD Takes A Breather, But Downtrend Still In Play

Technical analysis of Forex market

GBPCAD has rebounded in recent sessions, finding fresh buy orders after hitting 1.6710, a low last reached in March 2020. Despite this bounce, the structure of lower lows and lower highs remains intact. The pair is also trading below both its 50- and 200-day moving averages (MAs), which have posted a ‘death cross’ lately. Therefore, the outlook remains negative.
The short-term momentum oscillators reflect the latest bounce in the price. The RSI is trying to exit the bearish territory while the MACD has crossed above its red trigger line and looks to be moving higher. Both suggest that negative momentum is fading.

If buyers remain in control and manage to pierce above 1.6910, the next battle could take place around the 1.6990 zone. If that is breached as well, the spotlight would turn towards the 1.7080 region, which also encompasses the 50-day MA. Another upward violation could shift the outlook back to neutral, opening the door for a test of 1.7160.

Should the bears retake the wheel, preliminary support to any declines may be found near the recent lows at 1.6770. The multi-month trough of 1.6710 is close by and could be considered part of the same area. If that support barrier falters too, that would signal a resumption of the broader downtrend, turning the focus to 1.6530 next.

Summarizing, the outlook for GBPCAD remains firmly negative. A powerful break above 1.7080 is needed to bring that into doubt.