CADGBP finds buyers again around 0.5775
Canadian Dollar/British Pound (CADGBP) Technical Analysis Report for Feb 14, 2020 | by Techniquant Editorial Team
CADGBP finished the week -0.82% lower at 0.5784 after gaining 5 pips (0.09%) today on low volume. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (CADGBP as at Feb 14, 2020):
Friday's trading range has been 32 pips (0.55%), that's below the last trading month's daily average range of 44 pips. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for CADGBP.
During the whole day, prices traded within the prior day's range, unable to trade above the previous day's high or below the prior day's low forming an Inside Bar. After moving lower in the previous session, the pair managed to close higher but below the prior day's open, forming a bullish Harami Candle.
Prices are trading close to the key technical support level at 0.5761 (S1). Prices are trading close to the key technical resistance level at 0.5810 (R1). After having been unable to move lower than 0.5772 in the previous session, the forex pair found buyers again around the same price level today at 0.5775. The last time this happened on Wednesday, CADGBP actually lost -0.77% on the following trading day.
While still in a long-term downtrend, the short and medium-term trends both turned bullish already.
Selling might accelerate should prices move below the close-by swing low at 0.5772 where further sell stops could get triggered. With prices trading close to this year's low at 0.5720, downside momentum might speed up should the market break out to new lows for the year. As prices are trading close to February's low at 0.5727, downside momentum could accelerate should the FX pair mark new lows for the month.
Among the three market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bullish Harami Candle" stand out. Though it is usually interpreted as bullish, it has actually shown to be bearish for CAD/GBP. Out of 91 times, CADGBP closed lower 53.85% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after nine trading days, showing a win rate of 52.75% with an average market move of 0.00%.