FxWirePro: Cable bulls spike through rising channel and lingering bears with double top formation – Trade tunnel spreads and short hedge

The minor trend of cable (GBPUSD) formed rising channel and in the recent past it has broken out rising channel resistance but couldn’t sustain. As a result, failure swings have dragged the slumps below EMAs (refer weekly chart).

Is it puzzling? Yes, we meant GBPUSD swings oscillating between rising channel.  

Shooting star pattern restrains rallies below DMAs, while bears breach channel support with bearish DMA & MACD crossovers, both leading oscillators substantiate bearish interests (refer daily channel).

Ever since the formation of shooting star at 1.3697 levels, the price behavior of this pair has been extremely bearish.

For now, more price dips can be expected as it breaks decisively below the strong support at 1.3713 levels (refer daily chart), we see weakness in this prices on the prints of disappointing UK’s manufacturing PMIs, actual 53.9 versus forecasts at 54.8 and previous at 54.9.

Both RSI and stochastic curves converge downwards to the ongoing downswings on both daily and weekly timeframes that indicate strength and the intensified momentum in the selling interests.

Trade tips: On an intraday speculative basis, contemplating above technical rationale for the day, we advocate tunnel spread which is a binary version of debit put options to leverage yields. At spot reference: 1.3683, use upper strikes at 1.3772 and lower strikes at 1.3614 levels. The payoff structure would be certain and exponential as long as the underlying spot FX remains between these strikes on binary expiration.

Alternatively, initiate shorts positions in the futures contracts of mid-month tenors with a view to arresting downside risks.

Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.

Currency Strength Index: FxWirePro's hourly GBP spot index is inching towards -69 levels (which is bearish). While hourly USD spot index was at shy above 78 (bullish) while articulating (at 10:27 GMT).

For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex

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