Regardless of the channel-bound guidance GBP/CAD received over the last one-and-a-half years, the pair failed to repeat the recent slip towards 1.5108 – the ultimate low that came into play May 2010. A break above the upper trend-line of the pattern confirmed the trend to be broken, but was not sufficient to make bulls confident just yet. While several patterns, including the channel and a small-scale wedge suggest that green-zone strategies should win over markets soon, a bearish ADX divergence begs to differ, as does an unconfirmed descending channel. There is also a lack of any kind of reversal signals, but there is potential to gain some in case 1.6694 breaks to the upside. That might happen if the pair remains squeezed above 1.6494, the 100% Fibonacci Expansion, but even that might not be enough to severely tighten the large red Ichimoku cloud that dawns upon any short-term bullishness. The proximity to the upper Bollinger Band does, however, point towards overbought territory, meaning that a sudden soar would be capped at 1.6932 and could lead to immediate downside pressures in case it is overstepped. A change of slope is the most likely implication from the current development, rather than a switch of market characteristics. With SMAs lying way above and showing a similar picture as the Ichimoku cloud, we will look for much more prominent confirmations in order to truly say that bulls are up for a profitable quarter.
