FxWirePro: BTC/EUR’s ray of optimism from RSI bullish divergence, dragonfly doji and engulfing patterns – Directional trades to fetch leveraged yields

Technically, BTCEUR has formed dragonfly doji and bullish engulfing patterns at 2,906.50 and 3,525 levels respectively, these bullish pattern candlesticks take-off the price above DMAs, whereas the shooting star counters at 3,631.50 level, for now, the trend hovers at 7DMAs. Technical indicators have been little baffling with the prevailing price.

RSI’s bullish divergence and the strong supports at 21DMAs may bring-in the buying sentiment (on the daily terms).

But as the overbought pressures signalled by the stochastic curves, the bears in the intermediate trend slide below EMAs.

Current price slides below EMAs on shooting star at 5,728.50 levels, whereas the bullish engulfing at 3,581.50 level counters but yet to get the convincing buying momentum.

Every attempt of upswing is restrained below 7 and 9-EMAs and goes sideways vulnerably for now (refer weekly plotting). In addition to that, technical indicators on this timeframe, indecisive but momentum oscillators indicate slightly bullish and trend indicators signal bearish bias.

Trade tips: 

Strong support at this juncture is observed at 3348.43 levels, stiff resistance is at 3544.90 levels. Keeping these pivot points into consideration, we foresee potential rallies it is wise to deploy long hedges with a view of arresting upside risks upto 3900 levels in the near terms.

Favour optionality to the directional trades. We are inclined to position for a directional call spreads, as calling the bottom is quite difficult and adding naked spot exposure is risky at the moment. 

Thus, call spreads are preferred option structures given elevated skew and favourable cost reduction.

At spot reference: 3445 level, we execute USDCAD 2m/1m call spread with strikes of 3270/3900 for a net debit. As the underlying spot (BTCEUR) keeps rising, the payoffs would be exponential with reduced the cost of trading. 

Currency Strength Index: FxWirePro's hourly BTC spot index has flashed at 180 (which is bullish), while hourly EUR spot index has shown -31 (mildly bearish), while articulating at 08:48 GMT. 

For more details on the index, please refer below weblink:  http://www.fxwirepro.com/currencyindex