FxWirePro: USD/CAD breach below 38.2% Fibos to extend 2-years lows, more slumps on cards upon bearish DMA crossover – Tunnel spreads for trading

USDCAD slides in corrective mode even after retracing 38.2% Fibonacci levels, it is currently extending 2-years’ lows at 1.2385 levels.

We foresee more slumps upon bearish DMA and EMA crossover on both daily and monthly charts.

While leading oscillators on both time frames evidence the downward convergence constantly along with the price slumps. RSI’s bearish convergence signifies the strength in the downtrend, while stochastic on both time frames approached oversold zone but no traces of %k crossover, hence, we still see momentum in selling sentiments.

Formation of 3-black crows to evidence 2nd phase of the corrective mode in the major trend (refer monthly charts).

Ever since USDCAD has shown failure swings at 1.3793 levels, the prices have tumbled below EMAs. That’s where the three-black crows candle pattern is traced out (see monthly charts).

Prior to this corrective mode of the major trend, the shootings star began evidencing 1st corrective swings from the highs of 1.4689 to the lows of 1.2461 levels, now the formation of 3-black crows pattern breaches below channel support & 38.2% Fibonacci retracement level which is again 2nd phase corrective swigs.

These bearish patterns have already brought in bearish streaks in the recent past, heading southwards for next strong supports at 1.2467 levels, upon breach below this level, it is most likely to drag southward targets upto 1.2048 (i.e. 50% Fibonacci levels).

To substantiate these bearish stances, MACD on both time frames indicates downswings to prolong further.

Trade tips:

Well, contemplating above technical reasoning, on speculative grounds, at spot reference: 1.2387 we advise tunnel spreads which are binary versions of the debit put spreads favoring bearish indications.

This strategy is likely to fetch leveraged yields than spot FX and certain yields keeping upper strikes at 1.2412 levels and lower strikes 1.2336 at levels.

Currency Strength Index: FxWirePro's hourly USD spot index has turned into -57 (which is bearish), while hourly CAD spot index was at tad below -15 (mildly bearish) at 10:41 GMT. For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex

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