GBPCAD- Sentiment turns sharply positive
25th September 2017
Last week’s gains in GBPCAD were more modest than the previous week’s upside but they were enough to confirm a change in investor sentiment to bullish.
This is because this improvement took GBPCAD above the 21 week moving average for the first time in 3 months. Importantly that break confirmed a similar ‘golden’ cross of our RSI indicator through it’s own moving average the preceding week.
Back in June negative (dead) crosses of both GBPCAD spot and its RSI occurred in the same week and lead to an extension of more than 10 big figures to September’s low. What is marked about the rally from that point is that it came from higher levels than the October/January double bottom. In addition the lower end of the Keltner channel has been firmly rejected and GBPCAD has re-entered the weekly Ichimoku Cloud.
So, our medium term signals for sentiment are now assessed as positive with the upside likely to develop in the coming weeks. The 1.7171 high in June, from the week that began the negative trend, is the first objective. A move beyond that point then exposes GBPCAD sentiment to 1.7508/36, the top of the Ichimoku Cloud and June’s peak.
This move is being caused both by significant Sterling strength but also by a weakness in CAD that can be seen against the Dollar (see this week’s sentiment forecast) and, to a lesser degree, the Euro. EURCAD saw strong gains last week and traded through it’s moving average. But here RSI signals have yet to confirm this move (unlike GBPCAD). So this cross remains assessed as mildly negative but we are watching the RSI moving average closely for bullish confirmation or a weekly close of the spot EURCAD below the 21 week line which would highlight last week’s upside as a false one.
