FxWirePro: EUR/CHF bullish/bearish engulfing patterns signal both minor uptrend and major downtrend – Trade one-touch calls and directional hedge

Technical Glance: EURCHF forms bullish and bearish engulfing patterns on both dily and monthly plotting respectively.

Bullish engulfing has occurred at 1.1328 level, that has taken rallies above 7-DMAs with bullish DMA crossover. 

Both RSI & Stochastic curves show upward convergence to the ongoing price rallies that indicates buying momentum in the short-run, while trend indicators also signal uptrend continuation.

Thus, for now, more rallies in the interim trend seems to be on the cards upon bullish MACD and DMA crossovers (refer daily chart).

Whereas bearish engulfing candle has occurred at 1.1522 levels which has nudged price below EMAs on monthly terms. 

While both monthly leading oscillators (RSI and stochastic curves) show downward convergence to the prevailing price slumps that indicates the strength and bearish momentum in the selling sentiments. MACD on this timeframe, show bearish crossover that signals weakness in the major downtrend. 

The major trend that was in consolidation phase has now shown the failure swings at the stiff resistance of 1.1963.

Well, overall, on a broader perspective, the pair that was in the consolidation phase after a massive downtrend, bears have again managed to breach below major support zones – at 1.1375 (i.e. 21-EMAs) and 1.1297 (i.e. 7-SMAs), and now heading for retracing upto 50% Fibonacci levels (refer monthly plotting).

Trade Tips: Well, on trading perspective, at spot reference: 1.1351 levels, it is advisable to trade via one-touch call options, using strikes at 1.1365 levels, the strategy is likely to fetch leveraged yields as long as the underlying spot FX keeps spiking up to higher strikes on or before the expiration.

Alternatively,we advocate initiating longs in EURCHF futures contracts of Feb’19 delivery as further upside risks are foreseen in near terms. Simultaneously, shorts in futures of April’19 delivery. Thereby, one can directionally position their FX exposures. The directional implementation of the same trading theme by further allow for a correlation-induced discount in the options trading also if you choose strikes appropriately.

Currency Strength Index: FxWirePro's hourly EUR spot index is inching towards 81 levels (which is bullish), while hourly CHF spot index was at -45 (bearish) while articulating (at 11:01 GMT).

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