FxWirePro: EUR/USD’s Flurry of Bearish Patterns Likely To Drag Major Downtrend In Sloping Channel – Trading & Hedging Setup
EURUSD has formed back to back shooting star, gravestone doji and hanging man pattern candles.
Shooting star has occurred at – 1.1401
Gravestone doji has occurred at – 1.1402
Hanging man patterns have occurred at – 1.1435 & 1.1470 levels.
Ever since then the pair has been extending the prevailing downtrend upon these bearish patterns, while both leading & lagging oscillators are also in line with the price slumps.
The prices remain under pressure after breaking 1.1324 levels as the focus now turns to the more important 1.1097 pivot support region, as a breakdown there will suggest further dips to the last month’s 1.0992 lows.
Otherwise, we need to see a recovery through 1.1146 - 1.1250 resistance to alleviate the consolidation phase and take us back to an upper range.
On a broader perspective, we perceive the pullback from 1.2600 as corrective and look for a higher low over the 2017 1.0340 lows, ideally in the 1.09 to 1.08 region.
While we are optimistic that the low was set in October at 1.0879, we don’t have full confirmation yet. A decline through 1.0980 medium-term support would increase risks that we re-test those lows.
Accordingly, we advocated directional positions for EURUSD couple of days ago, we now continue to uphold the strategy on hedging grounds.
The Strategy: At spot reference: 1.1117 levels (while articulating), contemplating above technical rationale, one can execute boundary options strategy. Such exotic option with upper strikes at 1.1145 and lower strikes at 1.1080 levels likely to fetch exponential yields than the spot moves.
Alternatively, we recommended shorts in EURUSD futures of Feruary’20 delivery for the major downtrend, we now wish to uphold these hedging sentiments by rolling over these positions to March’20 deliveries. Simultaneously, long hedges of April tenors remain intact. Thereby, one can ensure directional positions amid macroeconomic turmoil.