GBPCAD recently experienced a bounce off the uptrend line, recovering above the 50-day simple moving average (SMA) following a 2% correction in June. This correction caused the price to dip below the SMA, but it managed to stay above the upper ascending trendline that has been in place since the autumn of 2023. While the momentum indicators are showing positive signs, there are underlying concerns about the sustainability of the uptrend.
The %K line of the stochastic oscillator seems to be slowing its ascent, indicating a potential loss of bullish momentum in the near future. However, it is still aligned positively with the %D line at this point. The MACD has been gradually increasing, but it has not yet turned positive or crossed above its red signal line. These factors suggest that the recent rebound may not be as strong as initially anticipated.
In order to solidify the uptrend, it is essential for the bulls to push the price towards the 20-day SMA, which is approaching the 1.7400 level. Breaking above this resistance zone could pave the way for further gains towards 1.7500 and eventually the June peak of 1.7603. However, if the bears regain control, the 50-day SMA around 1.7319 is expected to provide support before testing the upper ascending trendline. A breach of this trendline could lead to a deeper correction towards the 61.8% Fibonacci retracement level at 1.7159.
While the long-term bullish outlook remains intact despite the recent selloff, the short-term rebound is displaying signs of fragility. It is important for traders to closely monitor the key levels mentioned above to assess the future direction of GBPCAD. The resistance at the 20-day SMA and the support at the 50-day SMA will be crucial in determining whether the uptrend can be sustained or if a reversal is on the horizon. As the market continues to evolve, staying vigilant and responsive to changing dynamics will be essential for navigating the fluctuations of GBPCAD effectively.
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