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Long

NZD/CAD bulls adamant to give up momentum despite Gravestone

FX:NZDCAD   New Zealand Dollar/Canadian Dollar
93 0 11
NZD/CAD bulls adamant to give up momentum despite Gravestone occurrence – Digital calls to speculate and DCS to hedge:

The current prices hold stronger at supports of 0.9307 despite gravestone doji, Upswings likely to drag further as prices spike above DMAs and trend line.

After the pair jumps above 7 & 21DMAs, the current prices gained intensified buying momentum , 7DMA crosses-over21DMA. For now, even though the more upswings seem more likely as prices spiked above DMAs, whether it is sustainable is the biggest puzzle.

The upside potential is seen up to resistance at 0.9585 levels. Earlier, the pair has bounced above EMAs as well on the monthly graph, with 7EMA crossing over 21EMA which is a buying signal (near upper BB, see monthly chart). 

Both leading oscillators ( RSI and stochastic ) converge to the price rallies, the strength in buying interest confirmed after RSI showing demand zone at 50 mark and momentum is intensified.

On a broader perspective, we also spotted out the triple top formation on monthly charts (see dotted lines), but it puzzles with the non-directional trend with reducing volumes on rising prices. 

As we’ve seen a sense of strength again to the Canadian dollar             in the recent past especially cushioned by crude price but long term sustenance is still highly dubious.

While the Canadian employment claims also disappointed – as did the trade balance. As a result, CAD began easing; As long as the oil             price does not recover on a sustainable basis it has nothing to oppose USD on a fundamental basis at present.

Trade tips:

Well, on intraday terms, the trade strategy would be buying one touch binary calls for targets around 40-50 pips.

On the hedging grounds, one can also prefer below option spread with a view to establish a strategy to arrest any upside risks with reduced hedging cost.

Debit call spread = Long 2W ATM 0.52 delta call + Short another 1.5% OTM call of the similar tenor with net delta at 0.41 and at a net debit.

For a net debit call spread reduces the cost of hedging by the premium collected on the short leg of OTM call and long leg would take care of potential bounces but within an OTM strikes.
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