FxWirePro: USD/CAD hammer to bring-in ray of hope, major trend indecisive but bullish sentiments intact – Trading & hedging setup

USDCAD shows minor gains for the day, the pair has edged up about 0.31% while articulating.

Although bulls take-off rallies above 7-DMAs upon hammer formation at 1.3063 levels, the pair continues to lack significant upside momentum to detach itself from the 1.31 anchor cleanly as hammer and gravestone patterns pop-up amid bearish rout at 1.3063 and 1.3417 levels respectively. Both leading oscillators are in tandem with the current rallies for the day.

Nevertheless, the slight upside bias prevails despite the soft USD, perhaps on the back of a soggy crude complex.

On a broader perspective, the major uptrend that was spiking through the uptrend line so far, though the failure swings were observed at the peaks of 1.4667 levels the bears attempt to create some downside traction but the major uptrend seems to be intact as long as 100-EMA holds decisively.

For now, as it has signalled only momentary bullish traction as the current price spikes above 7-EMAs, one can think of some trading ideas using boundary strikes.

Overall, we continue to reckon that further upside pressure on the USD will emerge gradually as the H2 of 2020 develops. Strong support zone is observed at 1.2953 and 1.2610 levels.

Trading tips: At spot reference: 1.3103 levels (while articulating), boundary options strategy is advocated using upper strikes at 1.3167 and lower strikes at 1.3050 levels. One can achieve certain yields as long as the underlying spot FX remains between these two strikes on the expiration.

Alternatively, we recommend long hedges as BOC policy decision is scheduled for this week. This should inherently impart some upside pressure on the pair, hence, stay longs in USDCAD futures contracts of September’20 deliveries with an objective of arresting potential bullish risks in the major trend.