CAD seems to have been dragging from its run against USD (see both daily and monthly plotting). It has extended its yesterday’s gains from 1.3079 to the current 1.3074 levels.
As per our title, although the upswings in USDCAD spiked above 21DMAs today (made day highs of 1.3115), it hasn’t been able to hold onto those levels and collapsed again below 21DMA to form day lows of 1.3048.
For now, we reckon the breach below supports 1.3041 levels would expose more downside potential favoured by more momentum offered by leading oscillators.
As you can probably guess ever since the pair has rejected resistance at 1.3224, thereafter, dipping consistently that has taken the current price below DMA curves.
Both leading oscillators signal selling interests, as (14) evidences a convergence with the declining prices below 49 levels, on monthly terms the indicator is puzzling, so we believe there has been clear selling sentiment for the day and definitely no momentum for swings at least in the medium run.
While has also been signalling momentum in this selling interests both in daily as well as monthly terms.
In the broader perspectives, pattern have shown their effects on monthly patterns but for now, bulls resuming rallies are on the verge of forming handle pattern to the previous saucer pattern (see monthly charts).
Only if the rallies take place and continue to persist for several weeks then we could foresee handle pattern in coming months. Hence, one can initiate longs amid this environment.
Hence, don’t jump the guns for momentary gains, instead, use rallies to stay short for medium terms perspectives.
Alternatively, for intraday traders on speculative grounds, we recommend buying rallies and decide to initiate one touch call options which are highly leveraged products. Since 1W implied is on the higher side at around 8.45% in a slightly environment in short term, we recommend this long vega strategy.