FxWirePro: AUD/NZD bulls shrug-off shooting stars upon dragonfly doji and engulfing patterns – Trade boundary strikes and directional hedge

Chart and candlestick patterns formed: The AUDNZD bullish streaks have been shrugging-off shooting star patterns at 1.0545 and 1.0559 levels, and attempting to continue upon bullish engulfing in the minor trend and dragonfly doji patterns on the major trend.

Dragonfly doji pattern candles have occurred at 1.0507 and 1.0422 levels on monthly terms, consequently, the bulls take-off rallies above EMAs. 

For now, more rallies seem to be on cards as both technical indicators are bullish bias (refer daily plotting).

Ever since the pair broke out channel resistance with the stern bullish engulfing candle at 1.0422 levels (refer daily chart). Consequently, bulls are attempting to make upside traction in both the minor trend and major consolidation phase. 

The major consolidation phase, that has lasted for more than 5 years, is now stuck in the range, both leading oscillators indicate. 

Although we spot out dragonfly doji pattern candles but no confirmation from technical indicators on monthly terms. Overall, some sort of consolidation just above 1.0450 is foreseen.

Trade tips: At spot reference: 1.0591 levels, contemplating prevailing technical conditions in the near-term, we advocate boundary option strategy on an intraday trading basis, using upper strikes at 1.0620 and lower strikes at 1.0555 levels.

The trading strategy likely to fetch leveraged yields that would be exponential than spot trades when the forward FX prices keep spiking higher up to upper strikes on the expiration.

Short hedge: Alternatively, on hedging grounds ahead of RBA’s monetary policy minute next week, we advocate initiating longs in AUDNZD futures contracts of Apr’19 delivery as further upside risks are foreseen and simultaneously, shorts in futures of May’19 delivery for the major downtrend. Thereby, one can directionally position in their FX exposures. The directional implementation of the same trading theme by further allow for a correlation-induced discount in the options trading also if you choose strikes appropriately.

Currency Strength Index: FxWirePro's hourly AUD spot index is inching towards 102 levels (which is bullish), while hourly NZD spot index was at 93 (bullish) while articulating (at 06:15 GMT). 

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