FxWirePro: Tug of war between EUR/CHF bulls and bears end up in gains but likely prolong sideways – Rosy times to write strangles

On weekly plotting, despite the stiff tug of war between bearish and bullish swings but from last three weeks of upswings were evidenced.

We traced out a sharp gravestone doji pattern at 1.0830 levels testing resistance at this juncture (21SMA) that evidences the weakness again in this pair, as a result, we now see the slumps to continue in the narrow range trend.

On weekly and monthly plotting, although the brief upswings but the trend has been pretty well in the range that has lasted almost for 1 year, so these upswings are struggling even though bulls managed to break out above resistance at 21SMA.

While weekly MACD signals this prolonged range.

But for now, the moment when it occurs “Gravestone doji” pattern we raise the caution for intermediary bulls to remain cautious 1.0919 levels, because that’s where we’ve been seeing the failure swings in the recent past.

The current price has been quite on monthly with tepid momentum and this has been evident RSI on monthly which is currently trending steady, while stochastic has been indecisive.

1W ATM IVs of EURCHF is below 5% (4.6% to be precise), those who wish to carry trades on delivery basis can also deploy below option strategy.

Initiate shorts in 1% OTM Put and 1% OTM Put of 1w expiries, the strategy can be entered into net credit.

This spread likely to derive limited returns but certain yields as long as underlying remains between strikes that we’ve shorted, one can enter into this trading strategy when the trader ponders over that the underlying spot FX would neither spike nor tumble much by expiration and there shouldn’t be any dramatic change in IVs of this tenor.