EUR/CAD technicals and trade setup

FX:EURCAD   Euro / Canadian Dollar
132 0
EUR/CAD upswings glide in resembling symmetric triangle pattern but Shooting Star formation threatens momentum:

From the last couple of months, this pair seems to have taken support across 20EMAs in Bollinger bands or a lower side of the symmetric triangle.

While on the daily charts , the current prices are hovering around 7DMA, Shooting star appeared at peaks of 1.4760 levels. The appearance of these bearish patterns raise a cause of concern whether rallies would sustain or not as the leading oscillators do not converge to these upswings.

Hence, we expect more slumps upon the break below 7DMA like the previous week on shrinking momentum in rallies. Bearish crossover on MACD substantiates this standpoint.

Historically, a “shooting star” pattern candle formed at peaks of 1.4598 levels on monthly plotting to highlight a caution for bulls, consequently, we’ve seen corresponding slumps in subsequent months.

You can also observe the faded buying momentum from the stochastic study, while volumes do not confirm previous month rallies.

On intraday day (2H) charts, the current prices have slid below DMAs and sentiments have been bearish . In addition to that, leading oscillators (2H charts) are showing downward convergence with the price dips on intraday and weekly chart.

FX Option Trade Tips:

Contemplating the above technicals reasoning, we foresee trend is still puzzling with intraday or short trend being bearish bias.

Hence, at spot ref: 1.4760 (while articulating) we advocate one touch binary puts for intraday speculators in an on-going bearish environment that is likely to fetch certain yields.

Alternatively, using any abrupt rallies, you decide to initiate a diagonal bear put spread at net debit 1w ATM IVs of EURCAD is just shy above 8%, and likely to spike higher 9.9% in 1m tenor.

The execution: Initiate shorts in 1W (1%) out the money put with positive theta, simultaneously, buy 1M in the money -0.5 delta put option. Establish this option strategy if you expect that EURCAD would either expect sideways or spike up abruptly over the next near future but certainly not beyond your upper strikes.
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