The GBPCAD has dropped sharply during the past trading session and has formed a falling wedge formation as visible in this H4 chart. The currency pair currently trades at descending support levels and we believe this pair will attempt a rally back into its descending resistance level which is enforced by its 50 DMA.
MACD has formed a positive divergence and indicates that selling pressure does not confirm the lower low set by this pair. RSI has been trading in extreme oversold territory with initial signs of a breakout. We expect a breakout to fuel the rally.
We recommend a long position at 1.5310 which would be an addition the long position we took on February 13th at 1.5615. We also advice traders to place a stop sell order at 1.5250.
Traders who wish to exit this trade at a loss are recommended to place their stop loss order at 1.5250. We will not use a stop loss order for this forex pair and execute the trade as recommended. Place your take profit level at 1.5500.
Here is why we believe the GBPACD currency pair will move higher
- GBPCAD formed a falling wedge formation
- Currency pair trades at support
- MACD has formed positive divergence
- RSI trades in extreme oversold territory with initial signs for a breakout
- Short covering rally
