FxWirePro: GBP/CAD’s bullish RSI divergence but major bearish trend still remains intact – Construct tunnel spreads to speculate leveraged yields

Although the bullish attempt is observed in this pair, long legged doji has occurred again at the stiff resistance of 1.6869 levels. But bullish divergence on RSI is signaling mild upswings in the near future.

On the contrary, despite vigorous upswings bulls restrained at this resistance in the recent past, consequently, bearish swings resume (refer weekly chart). Any break below 1.6493 (i.e. 21WMA) likely to bring in the more bearish rout.

On a broader perspective, you could probably make out, as and when the pair approaches 7EMA it has consistently dipped in the recent months (refer monthly plotting), now more dips on cards as the rejection of resistance with confirmation from leading oscillators.

Please also be noted that as and when swings approached a pivot levels of 1.6371 it either spikes or slides heavily. Compare the breach below this levels with major downtrend (refer monthly chart).

On monthly RSI oscillator, we see consistent convergence to the prices declines, no traces of price recoveries on this timeframe.

%D line crossover is observed near overbought zone (weekly) and on monthly terms, now even below the 20s which is an oversold region, no convincing bullish crossover on slow stochastic has been a caution for aggressive bulls, we could foresee that there is still visible selling pressure.

Well, for this month, although you see strong rallies on the daily graph, the major bear trend seems robust after rejecting stiff resistances.

To substantiate, MACD signals the major downtrend likely to prolong further.

Well, having said that we wrap up with concluding note, short term aggressive bulls can speculate this pair in short run whereas long-term investors at current juncture contemplating above bearish indications, we advocate shorting futures contract of mid-month or near month expiries for target towards 1.6371 and 1.6179 or even upto 1.5964 levels cannot be ruled out upon breach of 1st two targets.

Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.

For an intraday speculation, one can buy tunnel spreads, which are binary versions of the debit put spreads.

This strategy is likely to fetch leveraged yields than spot FX and certain yields keeping upper strikes at 1.6869 and lower strikes at 1.6361 levels.