Based on multiple analysis of different GBP and CAD pairs, it seems that Great British Pound strength will move the GBP/CAD currency pair, rather than Canadian Dollar weakness.
Disclaimer: The analysis presented in this article is for educational purposes only and should not be considered as financial advice.
This analysis was done on MetaTrader 4.
Click below to open a Free Demo Account with our trusted brokers:
Trade Idea Details:
GBP/CAD symbol on the MT4 platform
Key support levels: 1.6938, 1.6874
Key resistance levels: 1.7175, 1.7272
On the Daily chart, the RSI oscillator has formed a bullish divergence, suggesting either a trend reversal or a potential correctional move up. After GBP/CAD tested the 1.6750 low on June 19, the price started to move up and broke above the descending channel as well as the 200 Exponential Moving Average. Such price action could be the confirmation of a strong buying pressure, which should result in the GBP/CAD upswing in the coming days.
On the 4-hour timeframe, we can see a rejection of the 200 EMA, which today acted as the support, providing a potential buying opportunity.
The 50% Fibonacci retracement level near the 1.7280 could be the first strong resistance and the upside target area. It is because this area previously has been acting as strong support and in the future might act as the resistance. Besides, this price area is also confirmed by the 127.2% Fibs, applied to the corrective wave down after GBP/CAD broke above the channel and the 200 EMA on the daily chart.
Potential Trade Idea:
As long as the price remains near 1.7000 psychological support and 200 EMA on the 4-hour chart, the buying opportunity is open. The upside target is seen at 1.7272 and confirmed by two Fibonacci retracement levels. In order to achieve the 1:2 Risk/Reward ratio, the stop loss should be placed at 1.6856.