FxWirePro: EUR/GBP slides through sloping channel in minor trend, range-bounded trend to prolong intermediate trend – Write strangles to trade

The daily chart of EURGBP portrays the minor trend that slides through sloping channel, where spinning top pattern signaled weakness at stiff resistance levels, the current price still remains below DMAs despite today's rallies.

The ongoing rallies are not backed by momentum, both leading oscillators (RSI & stochastic curves) show downward convergence that indicates the strength and intensified selling momentum.

As a result, the current trend likely to extend the sloping channel pattern with the bearish sentiments.

Stiff resistance is observed at 0.8773 (i.e. 21DMA levels), while strong supports at 0.8687 levels

In medium-term, a range between 0.8250 and 0.9032 is expected.

On a broader perspective, the prices are consolidating around the midpoint of the current 0.8730–0.9025 range even though the intra-day studies remain a little “overbought”, warning the upside is limited in the near term. We are watching the cross in conjunction with the key levels in the legs highlighted above.  

Leading oscillators have been little indecisive, even though RSI shows strength in bearish interests on weekly terms.

Contemplating above short-term technical rationale, you can place options trades to construct strangle shorts using upper strikes at 0.8973 and lower strikes at 0.86 levels.

The execution: Short 1m OTM call (0.8973) and simultaneously short OTM put option (0.86) of similar expiry, the position can be executed amid non-directional trend at the net credit.

One can rest assured with the certain yields as long as the underlying spot FX remains between these two strikes on expiration.

Currency Strength Index: FxWirePro's hourly EUR spot index has shown -35 (which is mildly bearish), while hourly GBP spot index was at 13 (neutral) while articulating at 07:37 GMT. For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex.

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