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FxWirePro: EUR/USD gravestone doji, shooting star and engulfing patterns develop sloping channel – Trade one touch put

EURUSD tumbles below 1.13 levels today, the weakness of this pair is observed on the occurrence of shooting star, bearish engulfing and gravestone doji pattern candlesticks at the stiff resistance zone (i.e. 1.1466 - 1.1501 levels). 

For now, price dips seem to be most likely on RSI’s divergence that indicates overbought pressures (refer daily chart).

Importantly, bears have managed to breach below strong support at 1.13 levels, while these bearish sentiments are backed by technical indicators, Current price slid DMAs but hovers at strong support, trend bearish bias. 

While the major downtrend has been sliding through sloping channel, where bears retrace 61.8% Fibonacci levels from 2018 highs on the failure swings at channel resistance as both leading oscillators signal bearish momentum (refer monthly chart).

Shooting star, hanging man pattern pops-up at peaks in the major trend, ever since then you could make out bears have shown their effects, steep slumps have gone below EMA levels and retraced more than 61.8% Fibonacci levels of January 2018 highs (i.e. 1.2612) and January 2017 lows (i.e. 1.0371 levels) (refer monthly chart).

Overall, the current price still remains well below 21-EMAs despite today’s rallies in a short-run, bears are most likely to extend 1 and half year lows.

We could foresee more slumps on cards as both leading oscillators (RSI and stochastic curves) and both trend indicators (DMAs, EMAs & MACD) have been signaling intensified bearish momentum and downtrend continuation respectively. 

Trade tips: At spot reference: 1.1289 levels, contemplating above technical rationale, one can execute one touch put options strategy. Such exotic option with lower strikes at 1.1216 levels of 1m tenor has favor slightly the prevailing selling sentiments. 

Alternatively, shorting futures of mid-month tenors are advocated with a view of arresting further potential slumps. 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 EUR spot index is inching towards -63 levels (which is bearish), while hourly USD spot index was at 79 (bullish) while articulating (at 11:43 GMT).

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

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