FxWirePro: GBP/CAD tumbles to 21-month lows on head and shoulder pattern – Trade One-touch put as bears disregard hammer

GBPCAD has been tumbling constantly from the last 2-3 months, we see no traces of recovery in the minor downtrend slides through 7DMAs, while bears disregard hammer pattern occurred recently at 1.6388 level (refer 4H chart).

To substantiate this bearish stance, RSI has entered in the oversold zone but still, signals faded strength.

In addition, downtrend likely to prolong upon bearish DMA & MACD crossovers and the intensified bearish momentum as both the RSI and Stochastic curves show downward convergence to the prevailing price dips.

While the major downtrend is also intensified on head & shoulder pattern on monthly terms, the pair has dipped from the highs of 1.7728 to levels to the recent lows of 1.6327 levels, in this journey, bears manage to breach below the trend line.

While both leading and lagging indicators are in tandem with the price slumps.

Trade tips: Well, at spot reference: 1.6353 levels, on a trading perspective, it is advisable to trade one-touch put option using lower strikes at 1.6206 levels. The strategy is likely to fetch leveraged yields as long as the underlying spot price keeps dipping towards lower strikes on the expiration.

Alternatively, it is wise to snap deceptive abrupt rallies and deploy short futures contracts of mid-month tenors for arresting downside risks.