FxWirePro: EUR/CAD breaches below channel support as bears shrug-off hammer – Trade double-touch put and directional hedges

EURCAD hammer patterns have occurred at 1.4685 and 1.4670 levels respectively and bears shrug-off these bullish patterns. 

The price slumps have extended steadily and decisively over the past two months or so, ever since the occurrence of gravestone doji at 1.5022 level, the cross dipped for 10 consecutive days, consequently, the interim bulls have resumed from the recent past. 

These short-term consolidation phase seem to be deceptive as the prevailing rallies are not backed by both momentum and the trend indicators, for now, snapping such deceptive rallies could be beneficial for the bears as more slumps appear to be most likely upon failure swings at the stiff resistances and the breach below significant supports in the recent past.

While the major trend, so far, spikes through ascending channel, but for now, the bears breach below channel support to signal losing strength (refer monthly chart). Both leading and lagging indicators bears' favor. RSI and fast stochastic curves show downward convergence to the prevailing price slumps indicates selling momentum.

To substantiate this, the bearish MACD crossover indicates downswings most likely to prolong further.

Gains are liable to prove transitory. We reckon intraday strength is liable to slow in the low 1.4665 area in the near-term; above 1.4665 intraday may extend the EUR retest 1.4708.

But overall, the major trend that spiked through ascending channel now turns into bearish, bears are now breaching below channel support to signal losing strength (refer monthly chart).

Hence, ahead of ECB monetary policy, at spot reference: 1.4632 levels, contemplating above factors,we advocate shorts in EURCAD futures contracts of Aug’19 delivery as further upside risks are foreseen with a view arresting potential price slumps and simultaneously, add longs in futures of far-month tenors on hedging grounds (preferably Oct’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.