FxWirePro: EUR/AUD Chartpack – Technicals and Derivatives Trade Setup

From last two days, EURAUD bulls attempt to counter gap down formation, upswing seems unlikely to prolong as both leading and lagging indicators are not in conformity to the prevailing bullish rallies (refer monthly chart).

For now, we could foresee stiff resistance at 1.5537 levels (i.e. 7-DMAs) in the minor trend, while current price is lingering at the strong support of 1.5466 after RBA’s monetary policy which has maintained status quo to keep its key rates at 1.50%.

Back-to-back shooting stars & hanging man pop-up at peaks coupled with overbought signal by leading oscillators, major trend goes in range but slightly bearish bias (refer monthly chart).

Momentum analysis: Both RSI and stochastic curves evidence downward convergence to the prevailing slumps that indicates the intensified bearish momentum on both daily and monthly plotting.

Trend study: MACD, DMA and EMAs have shown bearish crossovers that indicate downswings to prolong further.

Hence, overall, amid momentary rallies the trend is stuck in range with mounting bearish biasness.

Trade tips: On trading perspective, at spot reference: 1.5430 levels, capitalizing ongoing upswings, it is advisable to execute tunnel spread strategy with upper striking options at 1.5465 and lower strikes at 1.5346 levels, the strategy is likely to fetch leveraged yields as long as underlying spot FX keeps dipping but remains well above lower strikes 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 below 1.5139 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 43 levels which is bullish), while hourly EUR spot index was at 20 (mildly bullish), while articulating (at 06:33 GMT). For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex