FxWirePro: EUR/CAD Bulls Capitalize On Consecutive Hammers And Channel Support – Trading & Hedging Setup

EURCAD has begun bouncing back after it has bottomed out at 1.4457 levels. The pair has so far shown 0.18% price jump.

Technically, back-to-back hammers have occurred at 1.4464 and 1.4470 levels, these bullish patterns have taken-off rallies above DMAs with bullish crossovers.

For now, more rallies are on the cards as both leading and lagging indicators are in tandem with the current uptrend.

Both RSI and Stochastic curves show upward convergence to the prevailing rallies that indicates buying momentum.

While bullish DMA & MACD crossovers indicate the minor uptrend is most likely to prolong further.

While the major trend spikes through ascending channel, bears attempting to breach below channel support, on the contrary bulls are also holding firmly at this juncture from the last 4-5 month to signal strength in this demand zone.

RSI has shown downward convergence but gaining strength at 40 levels historically, while stochastic curves have entered in oversold territory and currently indecisive. 

Trading & Hedging Setup: On trading perspective, at spot reference: 1.4499 levels, we advise tunnel options spreads with upper strikes at 1.4525 and lower strikes at 1.4480 levels.

Hence, contemplating above technical rationale, ahead of BoC and ECB monetary policies that are scheduled for this week, we advocate shorts in EURCAD futures contracts of February’2020 delivery with a view of arresting abrupt price slumps and simultaneously, add longs in futures March’2020 on hedging grounds for potential resumption of the major uptrend. Thereby, one can directionally position in their FX exposures. The directional implementation of the same trading theme by further allow for a correlation-induced discount in the options trading also if you choose strikes appropriately.