FxWirePro: USD/CAD goes sideways but bearish bias after engulfing patterns, major trend attempts to breach below channel support

Ever since USDCAD has shown failure swings at the stiff resistance of 1.3627 levels, the prices have tumbled from the peaks of 1.3669 levels. That’s where the shooting star candle is traced out (see daily charts at 1.3605 levels).

This bearish pattern has already brought in bearish streaks in the recent past, heading southwards for next strong supports at 1.3010 levels.

Bears plummet prices below 7DMA & EMAs in the corrective phase, the breach below channel support likely to extend slumps (refer both daily and monthly charts).

The more bearish rout is on cards on any break below supports at 1.3199 levels.

Momentum study: Bearish momentum is intensified in the tight range of 1.3256 and 1.3199 levels.

Both leading oscillators signal selling interests, as RSI (14) evidences a bearish convergence with the declining prices below 38 levels, same has been the case on monthly terms, 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.

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

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 1.3256 levels and lower strikes 1.3189 at levels.

Currency Strength Index: FxWirePro's hourly USD spot index has turned into -75 (which is bearish), while hourly CAD spot index was at a tad below -20 (mildly bearish) at 10:04 GMT. For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex.