Most of Aussie pairs retains downward momentum, with AUDUSD sees the next target at 0.6670 level, AUDNZD gained a bit but capped below 1.0369, while AUDJPY is one pair that looks to be extremely weaker for us, tumbled to 72.407 during Asian session but gained quietly though, currently trading at 72.598 levels on oversold sentiment.
Technically, the minor trend of this pair breaches below rising wedge support, consequently, the current price has gone well below 7, 21 & 100-DMAs (refer daily chart).
For now, more slumps are on the cards as both leading and lagging oscillators signal bearish pressures.
RSI & stochastic curves show downward convergence to the prevailing downswings that indicate the intensified selling momentum.
To substantiate this bearish stance, bearish MACD & DMA crossovers also signal downtrend to prolong further.
On a broader perspective, the major downtrend looks to be intact as the bears shrug-off even hammer pattern at 79.200 levels which is usually bullish in nature (refer monthly plotting).
Although you get to see some mild rallies in the recent times, the major downtrend is capped below 21EMAs.
For now, bearish engulfing pattern has occurred in the previous month’s candle at 72.463 levels, the bearish pattern candle seems to be dragging the major downtrend as both leading and lagging oscillators are in favour of bears even on this timeframe.
Trade tips:
At spot reference: 72.598 level (while articulating), contemplating above technical rationale, tunnel spreads have been advocated using upper strikes at 72.883 and lower strikes at 71.841 levels.
Overall, as we could foresee further downtrend in the months to come, on hedging grounds we advocate shorting futures contracts of mid-month tenors ahead of RBA’s monetary policy that is scheduled for this week, as the underlying spot FX likely to target southwards below 72.007 levels in the medium run. Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.
