FxWirePro: AUD/USD bulls in minor trend capitalize on double bottom ahead of Fed; bears nudge intermediate downtrend on double top

AUDUSD forms double bottom pattern with bottom 1 at 0.7310, bottom 2 at 0.7317 and neckline at .7484 levels.

As a result, the upswings prop up further on this bullish pattern, the current prices hovering at DMAs amid today’ bearish sentiments, more dips likely only below 7DMAs, otherwise, bulls bet on further rallies toward next stiff resistance areas of 0.7444 – 0.7484.

But the above-stated bullish pattern is struggling to clear this resistance and produce considerable rallies. But both leading and lagging oscillators are in bulls’ favour.

The pair in intermediate trend has been extending double top formation with the breach below neckline, in the recent past, shooting star plummets prices below 7EMA again. On the contrary, the pair forms dragonfly doji and hammer patterns at 0.7440, 0.7402 and 0.7428 levels, but the bears seem to be shrugging-off these bullish patterns as bears extend price slumps. If US-China trade tensions remain the market focus in coming weeks, then the further bearish risks are to 0.72/0.73 mark.

Both RSI and stochastic curves have constantly been showing downward convergence to signal bearish momentum.

The Aussie has been one of the worst performers in the broad-based US dollar rally since the June FOMC and ECB meetings.  

Trade tips: Well, on trading perspective, at spot reference: 0.7407 levels, ahead of today’s US Fed’s monetary policy, it is advisable to buy at-the-money vanilla call option of 1w expiries, the strategy is likely to fetch leveraged yields as long as underlying spot FX keeps spiking higher on the expiration.

Alternatively, on hedging grounds, we advocate shorting futures contracts of mid-month tenors as the underlying spot FX likely to target southwards 0.72 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.

Currency Strength Index: FxWirePro's hourly AUD spot index is inching towards 79 levels (which is bullish), while hourly USD spot index was at 78 (bearish) while articulating (at 05:53 GMT). For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex