• FxWirePro: GBP/AUD price trend, candlestick analysis - trading and hedging setup

    Source: FxWire Pro - Technicals / 29 Sep 2019 11:43:32   America/New_York

    GBPAUD’s both minor and major trends are spiking through ascending channels (refer both daily and weekly charts).

    Bears in the minor trend, resume at the channel resistance of 1.8496 level as the spinning top pattern candlestick also pops-up at this juncture (refer daily plotting).

    Thereafter, the steep slumps below DMAs are observed, the pair has closed below 7-DMAs for two consecutive days, it looks as if a follow through dip has begun.

    In such a scenario, it should surpass 1.8174 (double top neckline) and 1,8135 levels (i.e. 21-DMAs) as the key obstacles for more slumps up to 1.8090 level that seems likely event in the near future as both leading oscillators are bearish bias. But trend indicators are indecisive.

    Both RSI and Stochastic curves show downward convergence to the prevailing prices to indicate the selling momentum.

    Contrary to that bearish scenario, on a broader perspective, the intermediate trend also spikes through the rising channel (refer weekly chart), where bulls hold firm at the channel support at 1.7792 level.

    Consequently, the current price spikes above EMAs as both leading oscillators signal bullish momentum & lagging indicators are indecisive on this timeframe as well.

    Trade tips: One trading grounds, at spot reference: 1.8182 levels, we advocate executing tunnel spread options strategy with upper strikes at 1.8247 and lower strikes at 1.8094 levels, the strategy is likely to fetch leveraged yields as long as the underlying price keeps sliding towards lower strikes on the expiration.

    Alternatively, on hedging grounds, at spot reference: contemplating above technical rationale, we advocate initiating shorts in GBPAUD futures contracts of October’19 delivery as further downside risks are foreseen in the short-run and simultaneously, longs in futures of December’19 delivery. 

    Thereby, the foreign traders, who are dubious about puzzling swings, can directionally position in their FX exposures. The directional implementation of the same trading theme by further allow for a correlation-induced discount in the options trading also if you choose strikes appropriately.

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