USD/CAD halting near trend line; add iron butterfly for hedge

On daily charts USDCAD is taking support near short term trend line at 1.2524 levels.

If it breaches this level then we suspect to slip a steep below 1.2425 level 1^st and then bottoming down upto 1.2380 levels.

Currently, RSI (14) trending at 66.0851 has already began shown the mood of diverging the price.

While Slow stochastic with %D line at 90.2931 & %K line at 90.4207 levels oscillates for crossover above 80 levels which would be deemed as overbought situation.

The short term being uptrend, however we could sense some corrections in near term are most likely.

Currency Option Basket: Vega suggests on longs suggest iron butterfly (USD/CAD)

To execute this strategy, the hedger goes long on a lower strike Out-Of-The-Money put and shorts At-The-Money Put simultaneously short again on At-The-Money call and long on Out-Of-The-Money call, this results in a net credit to put on the trade.

Iron Butterfly (USD/CAD) = Long OTM Put (strike at 1.2380) & Short ATM Put (1.2505) + Short ATM Call (1.2505) & Long OTM Call (strike at 1.2630)

Vega on Long OTM call = 58.65

Vega on Long OTM put = 55.55

Usually when the Vega numbers of a long option position are positive and the implied volatility rises or dips, the above stated option prices are directly proportional to the implied volatility.

So in this case Vega both on long position is reasonably acceptable.