FxWirePro: USD/CAD shooting star and spinning top counter-rallies, 3-black crow pattern signals more weakness – Boundary binaries as trend drifts in sideways

USDCAD bulls have had considerable bounces this week bottoming out at 1.2355 levels upto the peaks of 1.2590 levels, that’s where bears have resumed.

As a result, shooting star and spinning top patterns have occurred on intraday plotting at 1.2565 and 1.2560 levels respectively (refer 4H charts).

Consequently, these bearish patterns have countered previous rallies, the current prices still remain well below 7DMAs despite the attempts of bull rallies. While both leading oscillators signal overbought pressures at this juncture.

Please be extra keen on last six months’ price behavior, although the intermediary bulls have managed to test the strong support at 50% Fibonacci levels, the rallies have been restrained below 21EMA levels couple of times in this span.

Strong supports were seen at 1.2068-1.1925, observe sharp rallies as the pair touches these levels, this event has happened twice in last two and half years. But in last 6-months, the prices have collapsed as and when it approached 21EMA levels. The same incidence has happened even in in this month’s price action.

Hammer occurs to bring in upswings but 3-black crow pattern coupled with EMA crossover & OB pressures signals weakness, current prices slid & restrained below 7EMAs

Thereby, you could observe the stiff resistance at 1.2921 levels, that’s where more bearish pattern candles have occurred, consequently, considerable price dips have slid below EMAs.

Well, let’s not isolate this analysis, to substantiate this bearish stance, both leading oscillators (RSI and stochastic indicators) converge downwards constantly to the ongoing price dips that signal the intensified momentum and strength the prevailing bearish sentiments. Same has been the case in monthly terms.

Contemplating sideway trend, at spot reference: 1.2535, it is wise to snap deceptive rallies to deploy boundary binaries with upper strikes at 1.2560 and lower strikes at 1.2494.

The trading between these strikes likely to derive certain yields in this perplexed trend in the short term and the major trend, more importantly, these yields are exponential from spot movements.

For cash or nothing, these options would be exercised if the forward prices to remain between both strikes (i.e. 1.2560 > Fwd price > 1.2494).

Currency Strength Index: FxWirePro's hourly CAD spot index is inching towards -115 levels (which is highly bearish), while hourly USD spot index was at -95 (bearish) while articulating (at 07:12 GMT). For more details on the index, please refer below weblink:

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

Both indices constitute a neutral outlook but with more bearish bias that is conducive to our above recommendation.

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