FxWirePro: NZD/USD Spinning Top & Triple Top Patterns Intensifies Minor And Major Downtrends – Trading & Hedging Setup

As expected, NZD’s yesterday’s sharp upward rallie have extended to 0.6505 levels today.

Hammer & Dragonfly doji pattern candles haven take-off rallies above DMAs. On the contrary, spinning top pattern popped up at peaks of rallies to counter these upswings, consequently, the bearish pattern nudges below DMAs again.

For now, more slumps seem to be likely as both leading and lagging oscillators substantiate weakness.

RSI and Stochastic curves show downward convergence to the prevailing price slumps to indicate the selling momentum.

To substantiate this bearish stance, bearish DMA & MACD crossovers signal the current minor downtrend to prolong further.

NZDUSD on a broader perspective:  The current prices remained well below 21-EMAs despite the mild rallies, but the major downtrend is extended on triple top formation but most recently, the interim bulls are buzzing as it has broken-out triangle resistance. While bears resume slide back below 21-EMAs again capitalizing on further potential on above-stated bearish pattern (refer monthly chart). 

RSI oscillator, on this timeframe, shows faded strength at 57 levels, downward convergence to the prevailing downtrend and forms lower lows, while stochastic curves are little indecisive, showing deceptive bullish crossover though. As a result, bears appear to be extending further on the triple top formation.

Trade tips: At spot reference: 0.6502 levels (while articulating), contemplating above technical rationale we advocate one-touch call options using upper strikes at 0.6550 levels.

Alternatively, we recommend directional hedges that comprised of longs in NZDUSD futures contracts of February’20 delivery, simultaneously, shorts in futures of March’20 delivery for arresting bearish risks in the major trend. The short leg is likely to hedge potential slumps and the momentary upside risks can be arrested by the long leg. Thereby, one could be able to directionally position in their FX exposures on hedging grounds ahead of RBNZ and US non-farm data numbers.