CADGBP finds buyers at key support level
Canadian Dollar/British Pound (CADGBP) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
CADGBP finished the week 0.26% higher at 0.5871 after gaining 7 pips (0.12%) today. Trading up to 23 pips lower after the open, the market managed to reverse during the session as bulls took control ending the day above its opening price. The last time this happened on Monday, CADGBP actually lost -0.53% on the following trading day. 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 May 22, 2020):
Friday's trading range has been 37 pips (0.63%), that's slightly below the last trading month's daily average range of 46 pips. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently higher than usual for CADGBP. Prices continued to consolidate within a tight trading range between 0.5840 and 0.5892 where it has been caught now for the whole last trading week.
After trading down to 0.5840 earlier during the day, CAD/GBP bounced off the key technical support level at 0.5843 (S1). The failure to close below the support could increase that levels importance as support going forward.
Although the currency is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish.
Buying could accelerate should prices move above the close-by swing high at 0.5892 where further buy stops might get activated.
Among the five market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Bullish Intraday Reversal" stand out. Though it is usually interpreted as bullish, it has actually shown to be bearish for CAD/GBP. Out of 418 times, CADGBP closed lower 54.07% 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 53.11% with an average market move of -0.14%.