The uptrend extends to the upper channel line

• GBP/CAD rallied to resistance at the upper channel line of a rising channel.
• It is at an important crossroads. The uptrend continues, but the price diverges sharply with the MACD.

GBP/CAD hit a new high for 2024 and touched the top line of a long-term rising channel. Although in a strong uptrend, the top of the channel is likely to hold stiff resistance and there is a risk of a pullback and countertrend correction unfolding. The pair has reached a critical level.

GBP/CAD Daily Chart

GBP/CAD is showing a bearish divergence with the MACD momentum indicator (dashed red lines). Although the price has risen to a higher high compared to July 12, 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.

An initial target for such a pullback could be the 50-day simple moving average (SMA) at 1.7753.

That being said, the price itself has yet to form any sort of reversal pattern. It is also in an uptrend in all three major time frames – short, medium and long term. This suggests that the current generally flows north. Given that it is a principle of technical analysis that “the trend is your friend”, the odds are better.

However, given the resistance above, the price should break decisively above the upper line of the channel to confirm a continuation.

A decisive break would be one accompanied by a long green candlestick that closed close to the top, well above the channel line, or three green candlesticks in a row that close well above the trend line. A close above the yearly high of 1.8091 would confirm such a breakout, for example.

Such a breakout could hit a target at 1.8278, the 61.8% extrapolation of the previous move higher.