CADGBP closes within prior day's range
Canadian Dollar/British Pound (CADGBP) Technical Analysis Report for Mar 26, 2020 | by Techniquant Editorial Team
CADGBP finished Thursday at 0.5845 losing 89 pips (-1.5%). Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (CADGBP as at Mar 26, 2020):
Thursday's trading range has been 149 pips (2.51%), that's above the last trading month's daily average range of 116 pips. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently notably higher than usual for CADGBP.
Even with a strong opening the pair closed below the previous day's open and close, forming a bearish Engulfing Candle. The last time this candlestick pattern showed up on Tuesday, CADGBP actually gained 0.92% on the following trading day. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
After trading as low as 0.5819 during the day, the FX pair found support at the 20-day moving average at 0.5825. Prices broke below the key technical support level at 0.5887 (now R1), which is likely to act as resistance going forward. After having been unable to move lower than 0.5823 in the prior session, the forex pair found buyers again around the same price level today at 0.5819.
While CAD/GBP is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish.
Selling could accelerate should prices move below the close-by swing low at 0.5792 where further sell stops might get activated.
Among the nine market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bullish Bounce off SMA 20" stand out. Although it is usually interpreted as bullish, it has actually shown to be bearish for CAD/GBP. Out of 158 times, CADGBP closed lower 53.16% 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 10 trading days, showing a win rate of 55.06% with an average market move of -0.04%.