GBP CAD - 200 PIP SHORT TRADE OR IMMINENT RALLY?
On the one hand, it could be shaping up to complete the Resistance of a large Range. This would mean that a very profitable move of several hundred Pips would be possible for us.
DAILY CHART- SCENARIO 1
On the other hand, it could already be at the Support of a much smaller Range that was already formed.
DAILY CHART- SCENARIO 2
Right now, the market has started to move lower but appears to be pulling back at the Support of the smaller Range.
If this is in fact the real Range Support that is being "obeyed", then a move lower will not take place for some time. We would therefore have to wait on another Daily bearish signal to trade short.
However, this pullback may simply be the market reacting to a past Support area. It would therefore not necessarily be preventing the formation of a new Range. If so, it would take the form of a similar setup in 2009 on the GBP AUD.
Time will tell. In the meantime, we have to make a decision as to whether to keep or cancel the current Trade Setup now open for this trade.