Mark Carney of BoC to Replace Mervyn King as BoE Gov: GBP/CAD Reacts

The BoC has an unexpected vacant post, which it formed a special committee to recruit for.Forexlive

GBP/CAD 1H Chart 11/26/2012 11:05AM EDT

Breakout: The sterling reacted positively to the surprising news. Compared to the loonie, it broke above a recent consolidation range as seen in the 1H GBP/CAD chart. It has already been in a slightly bullish channel since last week, but the RSI has been mostly held under 60, a sign that the previous bearish momentum was still intact, until the reaction to today’s BoE news. The GBP/CAD breaks the near-term range, and tags 1.5950.

Retracement targets: When you look at the 4H chart, you see that this is 38.2% retracement of a downswing late Oct-early Nov. The market has been consolidating for a while now, with resistance at 1.60, near the 50% retracement. Looking at the 4H RSI, the development is similar to that in the 1H chart, where the preceding bearish momentum is lost as the reading pushes above 60. A slightly more aggressive retracement target could be the 61.8% level at 1.6040.

At this point, a break below 1.59 should be seen as a strong bearish attempt that shelves the retracement outlook. A break below the channel we see in the 1H chart opens up the lows around 1.5850 down to the 1.5814 low.

Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.