GBPCAD Long term growth opportunity . Opportunities in more exotic currency pairs are often overlooked. This week we highlight the long-term opportunity in GBPCAD. Technical data shows that a significant bottom was formed in November 2007 and the upside far outweighs the risk.
Technically , GBPCAD may have reached a significant low. Note that on this monthly chart, the low of November 2007 (1.9011) rose below the support line obtained from the lows of September 2000 and March 2006. The price has remained above this line since then. The indicator below the price is a 60. 60-month momentum oscillator, so this indicator tells us how much the price has deviated from the 5-year moving average in either direction. In November 2007, the index reached a low peak of around 5,000 (5,000 points below the 5-year average). The minimum of 1992 was also formed after the price fell 5000 points below the 5-year moving average. Momentum has rebounded from a level that previously showed a significant decline.
This is the same line drawn on the monthly chart. As mentioned, the price is on the upper line since November. GBPCAD has since broken out of its 200-day SMA; another sign that a significant low has been formed.
Indicator studies such as momentum and averages help identify potential opportunities, but these tools are not sufficient to identify entry points and identify risk. The wave principle allows you to set the right entry points by taking the appropriate risk. GBPCAD has rallied in 5 waves since May 2008 before reaching new highs (ending below March 2008 highs). Therefore, we know that the trend is increasing. The solution was expected and it happened. The correction may have ended at 1.9919 (notice the red line in the center of the triangle... this indicates support for the edge). A deeper correction is possible, but the long-term bias towards 1.9288 is justified. As the trend develops, upside targets will approach, but a test of the 2006 high around 2.35 is expected in the next few years.
Written by Technical Forex Strategist Jamie Settele
Technically , GBPCAD may have reached a significant low. Note that on this monthly chart, the low of November 2007 (1.9011) rose below the support line obtained from the lows of September 2000 and March 2006. The price has remained above this line since then. The indicator below the price is a 60. 60-month momentum oscillator, so this indicator tells us how much the price has deviated from the 5-year moving average in either direction. In November 2007, the index reached a low peak of around 5,000 (5,000 points below the 5-year average). The minimum of 1992 was also formed after the price fell 5000 points below the 5-year moving average. Momentum has rebounded from a level that previously showed a significant decline.
This is the same line drawn on the monthly chart. As mentioned, the price is on the upper line since November. GBPCAD has since broken out of its 200-day SMA; another sign that a significant low has been formed.
Indicator studies such as momentum and averages help identify potential opportunities, but these tools are not sufficient to identify entry points and identify risk. The wave principle allows you to set the right entry points by taking the appropriate risk. GBPCAD has rallied in 5 waves since May 2008 before reaching new highs (ending below March 2008 highs). Therefore, we know that the trend is increasing. The solution was expected and it happened. The correction may have ended at 1.9919 (notice the red line in the center of the triangle... this indicates support for the edge). A deeper correction is possible, but the long-term bias towards 1.9288 is justified. As the trend develops, upside targets will approach, but a test of the 2006 high around 2.35 is expected in the next few years.
Written by Technical Forex Strategist Jamie Settele
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