FxWirePro: AUD/NZD forms double bottom, buzzing bulls bring major trend back in range – Trade one-touch calls and directional hedge

Chart and candlestick patterns formed: The AUDNZD’s minor trend shows bounce back on double bottom formation with bottom 1 at 1.0275, bottom 2 at 1.0264 and neckline at 1.0670 levels (refer daily chart). More rallies likely only on the break-out above neckline. While both leading and lagging indicators substantiate uptrend on this timeframe. RSI and stochastic curves show upward convergence to the prevailing bullish rallies that indicates the strength and intensified buying momentum.

Consequently, bulls are attempting to make upside traction with bullish DMA & MACD crossovers in both the minor trend and major consolidation phase. 

On a broader perspective, dragonfly doji pattern candles have occurred at 1.0506 and 1.0422 levels on monthly terms, as a result, bulls take-off rallies above EMAs, on the contrary, failure swings were observed at the stiff resistance of 7-EMA levels as shooting star pops-up at 1.0631 levels.

The major consolidation phase that has lasted for more than 4 and a half years is now stuck in the range, both leading oscillators indicate mild strength but not convincing though.

Overall, some sort of consolidation just above 1.0625 is foreseen but the major range-bounded trend cannot be totally ruled out.

Trade tips: One-touch call options: Contemplating bullish sentiments in the near-term, if the prevailing bullish sentiments sustain, then, bulls are most likely to extend further up to 1.0730 levels. Thus, at spot reference: 1.0673 levels, one-touch call option strategy is advocated on the intraday trading basis, using upper strikes at 1.0730 level which is 50-60 pips from the current levels.

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

On hedging grounds, at spot reference: 1.0675 levels, contemplating above fundamental factors, we advocate initiating longs in AUDUSD futures contracts of September’19 delivery as further upside risks are foreseen and simultaneously, shorts in futures of November’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.