GBPCAD has been moving in a downtrend on its 4-hour time frame but appears to be finding support at the bottom of the rising forex trend channel. Price has bounced off the 1.8000 major psychological level and might rally up to the middle of the channel or the top.
Stochastic has also moved out of the oversold area, indicating a pickup in buying momentum and a forex trend bounce. Going long at market and aiming for the top of the channel with a tight stop below the forex trend channel support could yield a high return on risk, although the odds of a strong bounce are not so high since the pair has been moving lower.
Moving the stop to entry once price tests the middle of the forex trend channel could be a good way to protect profits and minimize exposure, especially ahead of this week’s top-tier events. Both the BOE and BOC are scheduled to announce their monetary policy decisions this week, and this might lead to volatility for the GBPCAD pair.
Forex Trend Forecast
The BOE interest rate decision might not be much of a market mover as traders tend to wait for the minutes of the MPC meeting to be released before taking any large pound positions. Take note though that the previous BOE minutes indicated that two policymakers voted to increase interest rates and that this might draw more support in the upcoming decision.
As for the BOC, a potential shift to more dovish stance for the BOC might lead to a forex trend channel bounce for GBPCAD if the central bank focuses on the weakness in inflation data. However, growth and spending figures for the Canadian economy have been strong and a more hawkish statement from the BOC might actually spur a forex trend support break.
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