- GBPCAD bounces off uptrend line
- But strength of rebound is in question
- 20-day SMA is nearest challenge for the bulls
GBPCAD has rebounded back above the 50-day simple moving average (SMA) after a 2% correction in June took the price below it towards the upper ascending trendline that’s been in place since the autumn of 2023.
The momentum indicators are positive again, but there are also signs that the upswing could already be faltering. The %K line of the stochastic oscillator appears to be slowing its ascent, though it remains positively aligned with the %D line for now. The MACD has been steadily edging higher, but the gains haven’t been strong enough to turn it positive or lift it above its red signal line.
Should the bullish momentum hold, it will be crucial to extend the rebound at least until the 20-day SMA, which is about to meet the 1.7400 level, to reinforce the uptrend. A break above this resistance zone would switch attention first to the 1.7500 level and then the June peak of 1.7603.
However, if the bears regain the upper hand, the 50-day SMA is likely to again act as support in the 1.7319 area, before testing the upper ascending trendline. Breaching it would open the way for the 61.8% Fibonacci retracement of the April-June upleg at 1.7159. Slightly below, the lower ascending trendline, which lies close to the 200-day SMA, could block further declines.
Summing up, although the longer-term bullish picture has not altered after the latest selloff, the short-term bounce back is not on a completely solid footing just yet.
