FxWirePro: EUR/CAD bearish sentiments pile up, collars well placed

It was exactly a week ago we were confident enough to vouch our write ups "No twists in EUR/CAD's uptrend - stay firm and safe with option collars".

But for now, it is now the time for raising eyebrow and stay with a cautious approach to deal with pair. It is not a U turn but it would rather be the right timing the market.

Here is the strategy, write deep OTM call option + hold an ITM put option (near month Call & mid month put). The original trade view, entitled EURCAD poised for further retreat, was an opportunistic short-term idea that attempted to take advantage of large price swings in volatile markets.

The above strategy was recommended exactly a week ago, that was the time when the pair started spiking up (see daily & weekly charts), thereby our shorts on deep OTM calls have fetched certain returns by initial credit received. Now the time for ITM puts with far month expiry. And from last three consecutive days the EURCAD dropped like a rock following the stronger-than-expected durable goods report.

This afternoon slide in EURCAD has stalled on trendline support at 1.4930 levels, once again just below the morning low suggesting that EURCAD is susceptible to another spike higher if it holds this level on closing basis, otherwise it is a clear sell from this level. But on weekly charts, as you can observe s sharp shooting star on trendline support likely to appear with two days to spare.