FxWirePro: EUR/CAD bearish engulfing in minor trend counters bullish engulfing in major trend – Short/long hedge for puzzling swings

Technical chart and candlestick patterns: Last month’s EURCAD, vigorous bullish momentum seems to have been shrunk away for now. The bullish engulfing pattern has occurred at 1.5617 levels on monthly terms, and hammer candles pop-up at every channel support to signify the strength of this pair in the major uptrend so far (refer monthly chart).

Although the pair manages break-out of falling wedge resistance in the minor trend, the formations of shooting star, hanging man and bearish engulfing patterns counter at 1.5597, 1.1.5617 and 1.54 levels respectively on daily terms, while both momentum indicators signal overbought pressures to counter the above-stated bullish patterns.

On a broader perspective, the long-term price behaviour has been developing ascending channel formation.

Overall, one can see a stiff tug of war between bearish engulfing in the minor trend and bullish engulfing patterns on major trend. Both RSI and stochastic curves indicate the intensified overbought momentum but little indecisive on monthly term. 

Trade Tips: Ahead of BoC monetary policy that is scheduled for this week, contemplating above technical rationale, at spot reference: 1.5196 levels, we advocate initiating shorts in EURCAD futures contracts of Jan’19 delivery and simultaneously, add longs in futures of Mar’19 delivery. 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.

Currency Strength Index: FxWirePro's hourly EUR spot index is flashing at -1 (which is absolutely neutral), while hourly CAD spot index was at 78 (bullish) at 06:05 GMT. 

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