Near upper channel line, bearish divergence

• GBP/CAD is approaching the upper channel line of an ascending channel.
• It is likely to meet firm resistance at the line and price diverges bearishly with the MACD.

GBP/CAD is trending higher in a rising channel, however, it is close to reaching the upper trend line of the channel, where it is likely to meet firm resistance and will likely pull back lower, as a consequence.

GBP/CAD Daily Chart

GBP/CAD is showing a bearish divergence with the MACD momentum indicator (dashed red lines). This means that although the price has risen to a higher high compared to the July 12 high, the MACD is actually lower than it was on July 12. This is a bearish sign and suggests a higher chance of a pullback developing.

Taken together with the looming overhead channel line, it indicates a risk of price correction back inside the channel. An initial target for a pullback would be the 50-day simple moving average (SMA) at 1.7733.

The price itself has not yet formed a reversal pattern. If it forms a candlestick reversal pattern such as Shooting Star, Bearish Engulfing or Hanging Man for example, then this will be even more evidence of a correction.