En the article below we will look at the longer term outlook for the GBP/NZD and GBP/CAD. Our view is the GBP is a long term buy and the upside profit potential against risk is attractive
Most Oversold Major Currency V Most Overbought
The GBP as we have noted in previous posts is the most oversold of the major currencies and commodity currencies are the most overbought. The GBP still remains oversold due to the Brexit sell off and while we have seen some corrective action its still historically oversold and will work its way higher.
In terms of the commodity currencies, they have been firm due to risk on and commodities having their best year in 40 years in terms of price strength. The commodity complex though has the largest speculative position ever and a significant correction is likely which will hurt both the CAD and the AUD.
Below are both the monthly and daily charts with the key levels of support and resistance in our view:
GBP/CAD Analysis
In terms of the monthly chart the GBP is sitting a monthly double trend line support which is expected to hold pull-backs. We are looking for moves up to 1.80 then 1.900 and if the latter target is reached we will have retraced the whole Brexit sell off.
In terms of timing entry to this trade we would look to come in above the 1.7100 level with a stop back behind double trend line support – target chart highs then monthly resistance.
GBP/AUD Analysis
in terms of the monthly chart we have a tight range and low volatility on the monthly chart below and the low volatility warns of a big move we expect a run up to retrace the Brexit Sell off candle and possibly exceed it.
In terms of the daily chart the GBP is a buy on dips or on a breakout to new daily chart highs above the 1.8400 level.
Research provided by LearnCurrencyTradingOnline.com
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