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FxWirePro: EUR/USD’s both minor and major trends slide through sloping channels, on verge of retracing 78.6% Fibos – Uphold short hedges

EURUSD’s both minor and major trends have been traveling through descending channels (observe daily and monthly plotting). Minor trend tests channel supports and forms hammer pattern at 1.0972 levels, mild bullish swings are restrained on shooting star formation at 1.1072 level. Since then the failure swings below 21DMAs resume downtrend as the trend indicators signal downtrend continuation (refer daily chart).

The major downtrend has also been sliding through sloping channel, where bears retrace more than 61.8% Fibonacci levels from 2018 highs on the failure swings at channel resistance, now on the verge of 78.6% as both leading oscillators and lagging indicators signal bearish momentum and downtrend continuation respectively (refer monthly chart).

Shooting star 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).

Trade tips: At spot reference: 1.1015 levels, contemplating above technical rationale, one can execute boundary options strategy. Such exotic option with upper strikes at 1.1036 and lower strikes at 1.0973 levels likely to fetch exponential yields than the spot moves. 

Alternatively, ahead of Fed’s monetary policy that is scheduled for tomorrow, shorting futures of mid-month tenors have been advocated with a view of arresting further potential slumps, we now wish to uphold the same strategy. Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.

By Niranjan Patil
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