GBPCAD Countertrend Setup (Sept 1, 2014)
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 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. Going long at market and aiming for the top of the channel with a tight stop below the 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 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.
By Kate Curtis from Trader's Way