FxWirePro: GBP/CAD Minor Downtrend Intact On Triple Top, Head & Shoulder Reminds Major Downtrend – Trading & Hedging Setup

GBPCAD’s steadies but needs to break above 1.7110 to gain. The consolidation attempts haven’t been supported in 2020 so far. Bears are on the upper hand in the last month, managed to plummet prices about 3.20%, currently, trading at 1.6996 (while articulating). 

Technically, triple top formation reminds the minor downtrend that slides below 7 & 21-DMAs, even though bears drift in sideways. For now, more weakness cards upon neckline breakdown.

On a broader perspective, bulls test support at neckline of head & shoulder pattern, Bears manage to slide below 7 & 21-EMAs.

Short-term price patterns indicates a minor low/reversal may be developing around the 1.70/1.71 area and more gains may extend if GBP can push through 1.7110 levels. 

Trend strength signals are mixed across a range of timeframes so broader market chop may extend for a while. But we think the GBP may move up to the 1.73/1.7350 area if a foothold above 1.7110 is achieved, otherwise, extension of downswings is most likely as both leading & lagging indicators appear to be bearish bias.

Trading tips: 

At spot reference: 1.6996 levels, contemplating above technical rationale, one can execute boundary options strategy. Such exotic option with upper strikes at 1.7035 and lower strikes at 1.69 levels. The strategy is likely to fetch exponential yields than the spot moves as long as the underlying FX remains between these two strikes. 

Alternatively, ahead of BoC monetary policy that is scheduled for this week, we advocated shorts in GBPCAD futures contracts of June’20 deliveries with a view to arresting potential dips.