FxWirePro: Break-out of EUR/CAD’s falling wedge develops rising channel with hammer formations – Trade delta calls and long hedge

EURCAD hammer pattern candles are frequently occurred at 1.51, 1.4938 and 1.4905 levels, these patterns are bullish in nature that are signifying the strength of this pair in the major uptrend (refer magnified view of the monthly chart). 

While the minor trend that was sliding through falling wedge, bulls managed to break-out falling wedge resistance and extends the prices rallies above DMAs, to substantiate this, both momentum and trend indicators signal bullish pressures (refer daily chart). This price behaviour has been developing ascending channel formation.

On a broader perspective, please be noted that the occurrences of shooting stars exactly at channel resistance followed by dips, and hammers pop-up quite often at the channel support in the recent past (monthly plotting) has been prolonging the rising channel pattern.

Most significantly, the major trend through rising channel are backed by momentum and uptrend confirmation.

Both RSI and stochastic curves are constantly showing the upward convergence to the price upswings). This indicates the intensified buying momentum. While the lagging indicators have also been signalling prolonged bullish sentiments.

Contemplating above technical rationale, at spot reference: 1.5128 levels, it is wise to buy in the money call options (strikes at 1.50 levels), the strategy would likely fetch us handsome yields with magnified effects as the underlying spot FX keeps spiking on the expiration. Only an in the money call with a very strong delta will move in tandem with the underlying spot move. 

Alternatively, adding long positions in futures contracts of mid-month tenors is advocated on hedging grounds.

Currency Strength Index: FxWirePro's hourly EUR spot index is flashing at -31 (which is mildly bearish), while hourly CAD spot index was at -30 (mildly bearish) at 06:21 GMT. 

For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex