FxWirePro: AUD/USD bulls shrug-off shooting star at channel resistance – Trade one-touch call and uphold short hedge

Technical chart and candlestick patterns: AUDUSD minor trend has been sliding through sloping channel (refer daily chart). The pair is attempting to breakout channel resistance despite the display of shooting star at 0.6893 levels (refer circular area), bulls are currently shrugging-off this bearish pattern. 

As a result, the interim upswings appear to be intensified, while both leading oscillators (RSI & Stochastic curves) show upward convergence to the prevailing rallies to signal intensified buying momentum. 

On a broader perspective, the double top formation with breach below neckline has been extending the major downtrend of this pair and hit 10 year lows at 0.6675 areas (refer monthly plotting), in the recent past, bearish engulfing candles followed by shooting star patterns plummet prices well below 7EMA again on this timeframe. 

Bullish engulfing pattern attempts to bounce back but 21-EMA caps upswings, every attempts of upswings are restrained below 21-EMA levels. The major downtrend remains intact as both lagging indicators bearish bias.

Trade tips: On trading perspective, at spot reference: 0.6919 levels, contemplating above technical rationale, it is advisable to execute one-touch call options strategy with upper strikes at 0.6935 levels, thereby, the leverage effects are possible in the yields as long as the underlying spot FX keeps spiking on the expiration.

Alternatively, on hedging grounds ahead of RBA’s monetary policy that is scheduled for this week, we advocate shorting futures contracts of mid-month tenors as the underlying spot FX likely to target southwards below 0.66 levels in the medium run. Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.