USD/CAD Forecast: Gravestone Doji denotes indecision, CAD calls OI rises

The USD/CAD pair faded the spike to 1.2591 and ended with marginal losses near its daily low of 1.2513 on Tuesday. The price action left a 'gravestone Doji' candle on the daily chart, which signals indecision in the marketplace.

Meanwhile, the CAD/USD Nov expiry options data published by the CME show increased demand for CAD calls on Tuesday.

Is the rally from Aug low of 1.2061 over?

Daily chart

Gravestone Doji signals exhaustion and does not necessarily mean trend reversal. Moreover, the trend change is determined by the price action on the following day.

The spot did drop to 1.2487 earlier today, but fresh bids pushed it back above 1.25 handle. Currently, it is trading at 1.2527 levels. Bearish gravestone Doji reversal would be confirmed if the pair ends on a negative note today and below the session low of 1.2487 (given the strong recovery).

A bearish gravestone Doji reversal confirmation would open doors for a dip below 1.24 handle (psychological support + 50-DMA).

The gravestone Doji also marks a failure to hold above the downward sloping 100-day moving average. Thus, bulls need to be cautious.

Bullish Scenario - Only a nice base building around 1.24 handle followed by a break above 1.25 would open doors for a sustained rally towards August high of 1.2778.

Open Interest in CAD calls jumped on Tuesday

Tuesday's gravestone doji formation (bullish exhaustion) on the USD/CAD was accompanied by a rise in the CAD calls.

The CAD/USD Nov expiry options data published by the CME shows-

  • Investors have taken note of the bullish exhaustion in the USD/CAD pair as indicated by the gravestone Doji pattern.The open interest (OI)/open positions in CAD calls jumped by 241 contracts on Tuesday, while the open positions in CAD puts improved by 110 contracts.
  • Clearly, investors boosted bullish bets on the CAD (bearish bets on USD/CAD). The cheap out of the money CAD calls are being preferred as hedge instruments.


Currently, being on the sidelines is the best option, although technicals are aligned (gravestone Doji + rejection at the downward sloping 100-day moving average) slightly in favor of the bears.

A big rise in CAD calls (bearish bets on USD/CAD) could be seen if the spot closes below 1.2487 today.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex Analysis

Latest Forex Analysis

Editors’ Picks

EUR/USD extends gains beyond 1.1820 after US data miss

EUR/USD is trading near weekly highs above 1.1820, as the greenback eases with worse than anticipated data and ahead of the US Federal Reserve decision. US Durable Goods Orders missed estimates with +0.8% in June.


GBP/USD recaptures 1.38 as the dollar pares gains

GBP/USD is trading above 1.38, as the safe-haven dollar gains have faded away after a risk-off mood earlier in the day. The pound benefited from the drop in British covid cases. 


Gold battles $1,800 as USD lingers near highs

Gold prices loiter near the $1,800 mark for the past five trading sessions. The US dollar remains steady near the four-month high ahead of the Fed’s interest rate decision. The prices moved cautiously despite the general negative sentiments surrounding the greenback.

Gold News

Crypto markets bleed after Amazon denies rumors; uptrend intact

Bitcoin price is experiencing a pullback after rallying 38% to tag $40,000. Ethereum price promptly follows BTC as it eyes a retracement to the $2,018 support level.

Read more

FX: 10 things to watch this week

Taking a look at the economic calendar, it is set to be a busy week for the forex market. There’s a central bank rate decision, GDP, inflation and employment reports scheduled for release. A number of big tech companies have ...

Read more