FxWirePro: WTI Crude Edgy at 50% Fibos on Shooting Stars, Trade Tunnel Spreads and Short Hedge

Technically, WTI crude, on daily plotting, shooting star pattern which is bearish in nature has occurred at $75 and $74.64 levels. Bearish streaks are intensified ever since then, for now, downswing continuation is staged with stern bearish candles with big real bodies at $72.61 and $70.97 levels as both leading and lagging indicators are bearish bias.

While the consolidation phase breaks-out symmetric triangle resistance (refer monthly chart), as a result, the uptrend retraces more than 50% Fibonacci levels of the lows of February 2016 (i.e. $26.08) and the highs of May’2011 (i.e. $114.79 levels). That’s where, the trend seemed slightly edgy with occurrences of shooting star and hanging man formations.

Momentum and trend study: The downswings are most likely to prolong further on bearish DMA and MACD crossovers, the current prices slide well below DMAs as selling pressures continued. 

Both momentum oscillators (RSI & stochastic curves) signal selling momentum at this juncture on both timeframes.

Overall, on trading grounds, at spot reference: 71.35 levels, capitalizing on any abrupt upswings, it is advisable to execute tunnel spread strategy with upper striking options at 72.50 and lower short lower strikes at 70.88 levels, the strategy is likely to fetch leveraged yields as long as underlying spot FX keeps dipping but remains well above lower strikes on the expiration.

On hedging grounds,we advocate initiating shorts in WTI CME futures contracts of near month tenors with a view to arresting further upside risks.

Currency Strength Index: FxWirePro's hourly USD spot index is inching towards -57 levels (which is bearish), while articulating (at 13:23 GMT). For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex