The collapse in the price of crude oil has weakened the Canadian Dollar against many currencies, but not against the Pound, which is even weaker.

Pound Sterling suffered grave losses following Bank of England (BOE) Governor Carney’s outright rejection of the possibility of higher intertest rates, despite 3 of the 8 members of the monetary policy committee (MPC) voting for them at Thursday’s meeting.

Even more surprising is that the recent bout of weakness has probably turned the technical trend bearish on the Pound to Canadian Dollar exchange rate.

Price action now suggests that the exchange rate may have reversed trend on the daily chart and has just started a new downtrend.

Confirmation came from the pair piercing below the key 1.6724 lows.

This means there is now more chance of further downside.

Although the pair is currently trading just above the 200-day moving average (MA), which is blocking further downside, it has changed trend according to peak and trough analysis and is likely to eventually break lower.

A clear and decisive break below the 200-day, signalled by a move below the 1.6720 level, would open the sluice gates to a wave of selling down to 1.6600 and then probably support at 1.6515 eventually.

MACD is bearishly below the zero-line and looks unflagging in its descent.

The break below the 1.6724 lows signalled a reversal according to an old fashioned but reliable form of a technical analysis which dates back to Dow Thoery.

The market moves in waves of buying or selling which depict peaks and troughs.

When the market fails to make a new high, however – or higher peak - (in an uptrend) the uptrend is in doubt.

This can happen when a correction occurs, for example, such as when the market pulls back and forms a common a-b-c correction.

After a correction, however, the market starts going up again and eventually makes a new higher high, thus resuming the upwards sequence of peaks and troughs.

If during an a-b-c correction, however, the exchange rate fails to make a new high at the second attempt and then rolls over and makes a new lower low, and that low is below the low of wave ‘c’ then that is the signal that uptrend has reversed, and peaks and troughs will probably start trending down.