GBP/CAD: Short Term Buying Opportunity

GBP/CAD is an interesting pair to keep an eye in the short term, in my opinion. GBP/CAD is creating a double divergence and also a bullish hidden divergence on the daily chart as shown below. I think we should be looking forward to buy GBP/CAD in short term for another leg higher. GBP/CAD" title="GBP/CAD" src="https://d1-invdn-com.akamaized.net/content/pic7897c78f77fb2625e5f5be250e16d544.jpg" height="768" width="1355">
Looking at the 4 hour chart, GBP/CAD formed a triangle recently, and broke the triangle to trade higher as seen below. The pair is now creating a bullish hidden divergence on the 4 hour chart as well. If the pair pushes down to around the broken triangle trend line and support at around 1.6545/55, holds the support, then we can jump into a buy trade for GBP/CAD. Remember, the pair must hold the trend line and support at around 1.6540 for our trade to be valid.
GBP/CAD " title="GBP/CAD " src="https://d1-invdn-com.akamaized.net/content/pic5eb4b640b2a7d7a369ee9a017fc92e56.jpg" height="768" width="1355">

Initial target should be around 1.6680/1.6720 and final target could be the last high of 1.6780. Stop should be placed below 1.6540.

Reviewing yesterday’s events and trades
Market has now started pricing in the possibility of a solution of the US debt deal. US dollar was seen big against Euro and GBP. On the other hand, risk correlated currencies like AUD and NZD were seen trading higher. UK inflation data was released yesterday, which measured better than expected. German ZEW economic sentiment too jumped higher from 49.6 to 52.8. Other than this, NY empire state manufacturing index fell from 6.29 to 1.52, missing the expectations of 7.00.

Fundamental Outlook for the day
Fed’s beige book is scheduled to be released later in the US session. It would be interesting to grab the key details about the economy from this particular event. NAHB Housing market index is also lined up, which is expected to remain unchanged from 58. Other than this FOMC member Fisher will also be speaking on monetary policy later in the NY session. Also, do not forget to keep a close eye on the news wire to get any news related to the US debt deal and shutdown. As the deadline approaches, the possibility of solution increases, in my opinion.

This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: GBP/USD, AUD/NZD, AUD/CAD and EUR/JPY.