FxWirePro: USD/CAD Resumes Major Uptrend on Trendline Support – Trading and Hedging Setup

Loonie has lost its bullish momentum of late, USDCAD has shown price rallies of about 1.02% in November. We quickly run you the overall technical condition that is reflecting mixed signals as well. The dollar will close out the week net higher but well off the mid-week peak, all else remaining equal at this point. Trend oscillators are leaning USD-bullish, but not decisively so at this point. Intraday price signals and oscillators are less USD-supportive.

Bullish engulfing patterns at 1.3225 and 1.3265 levels take-over rallies above DMAs with bullish crossovers (refer daily chart), while both leading and lagging oscillators are in tandem with the upswings.

On a broader perspective, the major uptrend goes through uptrend line (refer weekly plotting), while trend line support signals strength as both momentum oscillators indicate buying momentum, current price spike above 7&21-EMAs with bullish MACD & DMAs.

Trade Tips: On trading perspective, at spot reference: 1.3301 levels, contemplating prevailing bullish sentiments, as bulls are most likely to extend further rallies, one-touch call option strategy is advocated using upper strikes at 1.3346 levels which is 40-45 pips from the current levels.

The trading strategy likely to fetch leveraged yields that would be exponential than spot trades when the forward FX prices keeps spiking higher up to upper strikes on the expiration.

While on hedging grounds, contemplating above technical factors and monetary policy of BoC that is scheduled for the next week, we advocate initiating longs in USDCAD futures contracts of December’19 delivery as further upside risks are foreseen and simultaneously, shorts in futures of February’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.