FxWirePro: AUD/NZD bears travels through descending channel in minor trend, wedged in major trend – Trade tunnel spreads and short hedge

We’ve already quoted AUDNZD swings getting wedged in between ‘hammer and shooting stars’, the minor trend has been developed in the sloping channel in this process. We’ve also stated that most likely ‘dragonfly doji’ may prolong range-bounded major trend. As stated before, the price of this pair is behaving as per whims and fancies of above-mentioned candlestick patterns. 

Trend analysis based on chart and candlestick patterns formed: AUDNZD bears are dragging slumps to make further downside traction in both the minor trend and major consolidation phase. 

Hammer pattern candle had occurred at 1.0382 levels, while on the contrary, the failure swings were observed at 1.0416 levels, shooting star has appeared exactly at channel resistance (at 1.0423 levels). Consequently, bears hampered previous rallies and plummeted prices below 7 & 21-SMAs. 

For now, more dips seem to be on cards as all technical indicators are in bearish favor (refer 4H plotting).

We reiterate that the major consolidation phase has never gone anywhere but has lasted for more than 4 and a half years is now stuck in the range (refer monthly plotting), both leading oscillators and lagging indicators signal bearish pressures. 

Bears, on this timeframe also, plummet prices below EMAs on shooting star at 1.0856 levels with bearish MACD & EMA crossovers, while both RSI & Stochastic oscillators indicate selling momentum.

Overall, both minor and major trend of AUDNZD has been weaker, we could foresee more slumps on cards if it breaches below 1.0333 level decisively and that seems most likely event.

Trade tips (Tunnel options spread): Contemplating above technical rationale in the near-term, at spot reference: 1.0364 levels, we advocate tunnel option spread strategy on an intraday trading basis, using upper strikes at 1.0383 and lower strikes at 1.0333 levels.

Short hedge: Alternatively, on hedging grounds, long-term investors are advised to stay short in futures contracts of mid-month tenors. The writers of the futures contract are expected to maintain margins in order to open and maintain a short futures position.

Currency Strength Index: FxWirePro's hourly AUD spot index is inching towards -131 levels (which is highly bearish), while hourly NZD spot index was at 60 (bullish) while articulating (at 05:41 GMT). These indices are conducive for our bearish setup.

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