FxWirePro: GBP/AUD hammer develops rising channel, bulls shrug-off shooting star on bullish crossovers – Trade boundary strikes and long hedge

Although a mild bearish swings are observed in GBPAUD from last two days, stern upswings have taken the current prices well beyond DMAs as the bulls have managed to break out stiff resistance at 1.7997 levels (refer daily chart).

While the consolidation phase in the intermediate trend seems to have been reinforced at rising channel support upon the bullish candlestick formations of engulfing and hammer patterns at channel support (at 1.7485 and 1.8007 levels respectively). As  a result, sharp rallies above EMAs (refer weekly chart).

Bulls have shrugged off despite the occurrence of yesterday’s shooting star pattern. 

While both leading and lagging indicators on both timeframes are showing upward convergence to the prevailing price rallies that signal strength and intensified bullish momentum.

Momentum study: The stochastic oscillator shows upward convergence entering into overbought zone with its %k crossover which is a bullish crossover, in addition to that, RSI has also been converging upwards to the prevailing price upswings right from the oversold zone that signals strength and intensified momentum in its bullish sentiments (refer both daily and weekly terms).

Trend study: The prevailing upswings likely to prolong further upon bullish DMA, EMA and MACD crossovers (refer both daily and weekly plotting).

Trading tips:

Well,contemplating above technical reasoning, on speculative grounds as the leading oscillators have entered into overbought zone, we advise boundary options favoring both bullish indications and overbought pressures as well. Using upper strikes at 1.8375 and lower strikes at 1.8250 levels likely to fetch leveraged yields than spot FX as long as the underlying spot remains between these strikes on expiration.

On hedging grounds, we advocate initiating longs in GBPAUD futures contracts with a view to arresting further upside risks.

Currency Strength Index: FxWirePro's hourly GBP spot index is flashing 45 (which is bullish), while hourly AUD spot index was at shy above -56 (bearish) at 06:24 GMT.

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