FxWirePro: Shorts on USD/CAD PRBS derive certain yields – shooting star signifies longs function

Technical glance:

As an evidence of the below recommendation, we traced shooting star yesterday at 1.3300 levels that signal intermediate correction is underway in near future ahead. The formation of this bearish pattern candle at peak is piling up some sort of selling pressures now. Currently, the pair is lingering at 1.3326, RSI curve on weekly is trending at 73.5503 facing towards south, while %D line 91.6013 and %K line at 93.2121. Hence, although it is not going to be steep slumps or long term trend reversal we would still foresee near targets at around 1.3239 areas first and can even extend upto 1.3172 levels in near terms with a strict stop loss at 1.3385 levels.

Assured returns on shorts: By now, our 1W shorts on back spreads would have achieved desired returns as the pair rallied from 1.3013 levels on 18th upto 1.3416 (highs of this week)

Please refer for further readings:
http://www.econotimes.com/FxWirePro-Hedge-USD-CAD-with-PRBS-as-delta-risk-reversal-projects-intermediate-term-trend-reversal-91042

Currency hedging framework: USDCAD

With the above reasoning, we recommend stay firm with longs that was advocated a week ago in order to arrest potential downside risks of this pair in medium run . Hence, longs on 1M 2 lots of At-The-Money -0.48 delta puts have begun functioning. We set up this strategy contemplating above delta risk reversal indications. The short ITM puts funds to the purchase of the greater number of long puts and the position is entered for no cost or a net credit.

Rationale: From the table showing delta risk reversal and above technical indications, the real challenge depends on a smart interpretation of these numbers and scrutiny of trend. The delta risk reversals of 1W to 1M contracts have now shifted into negative and we've observed the impact of this computation last week on price rallies, now what do you think can happen..? The mystified picture has been uncovered in our above analysis and recommendation.