The GBPCAD has made a big run up on Tuesday after the poor Canadian economic data, bouncing off 1.8200. However, price action has begun to consolidation towards the top of the run-up and just under the four-year high of 1.8561.
The pair is currently trading at 1.8519, and price is lingering within a supply zone established on the 4H chart. The 300-plus pips since Tuesday, the pair could see a nice sized pullback to the bottom of the consolidation zone at 1.8406. This would mark the first level of support and where the 20 EMA currently sits.
Price action can sit attempt to test the highs, but the inability to make a new high, while remaining in the supply zone, could prove to be high probability shorting opportunity. The next level of support is seen at 1.8350.
If there is a new high made, and the pair breaks out on Sterling strength/Canadian dollar weakness, there could be a quick ascent to 1.8725 marked by the next level of resistance located on the five-year weekly chart. The pair could get hung near 1.8650 given that the pair has been technically overbought since last November. Given the potential for the Bank of England (BoE) to increase rates sooner than expected, the pair shall remain in an uptrend after a pullback.