Technical Chart and Candlestick Patterns: Both USDCAD minor and major trends are weaker,
We trace out bearish candlesticks such as, bearish engulfing patterns on both daily and monthly plotting (refer oval-shaped area).
Hanging man at 1.3331 (daily), Bearish engulfing at – 1.3285 and 1.3191 levels (on daily), at 1.3123 and 1.3086 levels (on monthly chart).
The above-stated bearish candlesticks nudge prices below DMAs, form double top pattern and breach below neckline at 1.3134 levels, consequently, slide further below DMAs and EMAs. For now, more slumps appear to be on the cards as bears breach below neckline.
While both leading indicators (RSI & Stochastic curves) have entered in oversold zone but still signal bearish momentum.
On a broader perspective, the major uptrend spikes through uptrend line (refer monthly chart), the current price slid below 7 & 21-EMAs. Currently, hovering at uptrend line.
Chance of breaching below is quite high as both momentum oscillators are showing downward convergence to indicate the selling pressures.
Trade Tips: On trading perspective, at spot reference: 1.3060 levels, we advise tunnel options spreads with upper strikes at 1.3078 and lower strikes at 1.3016 levels.
On hedging grounds, contemplating above technical factors and monetary policies of Fed and BoC that are scheduled for this week, we advocate shorts in USDCAD futures of November’19 delivery not disregarding the CAD’s strength amid the prevailing global geopolitical risks.
