FxWirePro: USD/CAD bulls bounce back above double top neckline but restrained below 7DMA, heaps of bearish patterns in major trend

As stated in our previous write up, bearish rout has gone below strong support zone of 1.3280 levels.

For now, the prices bounced back at the double top neckline but restrained at 7DMA, short rallies as bullish momentum is not convincing.

But we could foresee more slumps on cards on any break below supports at the neckline of the double top formation.

The pair has formed the double top (bearish pattern) with top 1 at 1.3588 and top 2 at 1.3598 levels (daily charts).

After spinning top & Doji patterns occurred during handle formation, upswings seem to be exhausted (see monthly charts).

Bullish momentum is shrinking away in a tight range at 1.3598 levels.

Both leading oscillators signal selling interests, as RSI (14) evidences a bearish convergence with the declining prices, on monthly terms the indicator is puzzling, so we believe there has been clear selling sentiment for the day and definitely no momentum for bull swings atleast in the medium run.

While stochastic has also been signaling momentum in this selling interests both in daily as well as monthly terms.

In the broader perspectives, Shooting star patterns have shown their bearish effects on monthly patterns but for now, bulls resuming rallies are on the verge of forming handle pattern to the previous saucer pattern (see monthly charts).

Trade tips:

Well, contemplating above technical reasoning, on speculative grounds 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 1.3213 and lower strikes at 1.3116 levels.