FxWirePro: EUR/CAD Minor Trend In Sloping Channel, Major Trend In Rising Channel – Trading & Hedging Setup

EURCAD has again begun bouncing back after it has bottomed out at 1.4263 levels. The pair has so far shown 12% price jump.

Technically, the minor trend slides through sloping channel (refer daily chart), while shooting star pops-up at the channel resistance signal weakness, leading oscillators indicate overbought pressures.

On a broader perspective, major trend spikes through ascending channel, bulls test channel support with hammer formation to signal strength, both leading indicators signal buying sentiments. Bulls are holding firmly at this juncture from the last 5-6 months to signal strength at this demand zone.

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.

RSI has shown downward convergence but gaining strength at 40 levels historically, while stochastic curves are currently indecisive. 

Trading & Hedging Setup: On trading perspective, at spot reference: 1.5068 levels, we advise tunnel options spreads with upper strikes at 1.5170 and lower strikes at 1.4920 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 June’2020 delivery with a view of arresting abrupt price slumps and simultaneously, add longs in futures July’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.