GBP/CAD Price Prediction: Bearish Shooting Star candlestick at top of rising channel


  • GBP/CAD has formed a bearish candlestick pattern after briefly breaking above a channel line. 
  • This could be a sign a pullback is about to unfold, however, downside pressure has been limited so far. 

GBP/CAD has temporarily broken above the upper channel line of a long-term rising channel before falling back down and closing (on Friday) near where it opened. 

The pattern thus formed is a Japanese Shooting Star candlestick (orange rectangle on chart below) which is a short-term bearish sign, especially if followed up by a bearish down day, as seems to be the case (so far) on Monday. 

GBP/CAD Daily Chart 

That said, GBP/CAD is in an uptrend on all three major time frames – the short, medium and long-term. This suggests that overall the “current” is flowing north. Given it is a principle of technical analysis that “the trend is your friend” this would suggest the odds continue to favor more upside.

However, GBP/CAD is also showing bearish divergence with the Moving Average Convergence Divergence (MACD) momentum indicator (red dashed lines). Although the price has risen to a much higher peak compared to July 12, the MACD is actually lower. This is a bearish sign and suggests a higher chance of a pull back evolving. Given the strong overarching uptrend, however, the pullback might just be a temporary sell-off.

If there is a correction, however, it might reach the 50-day Simple Moving Average (SMA) at 1.7753. 

Alternatively, a break above the high of the Shooting Star at 1.8245 would probably confirm that price is going even higher. If so, it might reach a target at 1.8278, the 61.8% extrapolation of the prior move higher. 

Any further bullishness beyond the confines of the channel is likely to be short-lived. Such moves often signal “exhaustion” and are a precursor to deeper corrections on the horizon.

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

AUD/USD consolidates near 19-month peak as traders await US PCE Price Index

AUD/USD consolidates near 19-month peak as traders await US PCE Price Index

AUD/USD oscillates in a range below the 0.6900 mark, as traders opt to move to the sidelines ahead of the US PCE Price Index. In the meantime, the RBA's hawkish stance, the optimism led by additional monetary stimulus from China, the prevalent risk-on mood, and a bearish USD continue to act as a tailwind for the pair.

AUD/USD News
USD/JPY holds above 145.00 after the Tokyo CPI inflation data

USD/JPY holds above 145.00 after the Tokyo CPI inflation data

The USD/JPY pair attracts some buyers to near 145.20 on Friday during the early Asian session. The pair gains ground near three-week highs after the Tokyo Consumer Price Index. The attention will shift to the US Personal Consumption Expenditures Price Index for August, which is due later on Friday. 

USD/JPY News
Gold price holds steady near record peak; looks to US PCE data from fresh impetus

Gold price holds steady near record peak; looks to US PCE data from fresh impetus

Gold price consolidates below the all-time high set on Thursday amid overbought conditions on the daily chart and the risk-on mood, though dovish Fed expectations continue to act as a tailwind. Bulls, meanwhile, prefer to wait for the release of the US PCE Price Index before placing fresh bets. 

Gold News
Ethereum could retest $2,707 resistance following increasing ETF inflows and uptrend in funding rates

Ethereum could retest $2,707 resistance following increasing ETF inflows and uptrend in funding rates

Ethereum traded around $2,640 on Thursday, up more than 2% following increased bullish bias among investors, as evidenced by ETH ETF net inflows and an uptrend in funding rates. However, investors may be wary of a potential correction from ETH's rising exchange reserve.

Read more
RBA widely expected to keep key interest rate unchanged amid persisting price pressures

RBA widely expected to keep key interest rate unchanged amid persisting price pressures

The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.

Read more
Five best Forex brokers in 2024

Five best Forex brokers in 2024

VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals. 

Read More

Forex MAJORS

Cryptocurrencies

Signatures