FxWirePro: GBP/CAD momentary bulls shrug-off gap down pattern, but bears in major trend resume at double bottom neckline – Trade and hedging tips

GBPCAD has formed shooting star and gap down patterns that plummets price below 7DMA levels. But bulls are shrugging-off gap down formation, the prevailing rallies are not backed by both leading and lagging indicators.

Upon failure swings, the pair is likely to drag slumps upto next strong support at 1.7033 levels. For now, more dips seem to be likely on bearish DMA crossover (refer daily chart).

Bears counter double bottom pattern with shooting star at around neckline, both leading and lagging indicators substantiate this bearish stance (refer monthly plotting).

Momentum oscillators indicate bearish, RSI signals faded strength, fast stochastic curves bearish momentum.

Trend indicators – DMAs, EMAs and MACD have shown clear bearish crossovers that indicate bearish swings to prolong further.

Support levels - 1.7033 and 1.7010 levels.

Resistance levels - 1.7156 (21-DMA) levels.

Recommendation: On trading grounds, good to stay short on failure swings at 21DMA levels, SL: 1.7163, TP: 1.7107 levels.

Otherwise, on hedging grounds, we advocate shorting futures contracts of mid-month tenors as the underlying spot FX likely to target southwards 1.6750 levels in the near terms.

Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.

Currency Strength Index: FxWirePro's hourly GBP spot index is inching towards 67 levels (which is bullish), while CAD is flashing at 0 levels (which is neutral), while articulating at (10:37 GMT). For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex