FxWirePro: EUR/GBP Hammer & Saucer Patterns Resume Uptrend – Trading & Hedging Setup

EURGBP minor uptrend has continued yesterday’s rallies after the test of support at 21-DMAs, it has constantly been rising from the lows of 0.8866 to the current 0.8959 levels. Bulls take-off rallies through saucer pattern which is bullish in nature (refer daily chart). 

Thereby, the current price remains well above 7, 21 & 100-DMAs with bullish DMA crossovers.

For now, more rallies seem to be on the cards as both leading oscillators (RSI & Stochastic curves) show overbought pressures and the upward convergence to the prevailing upswings signals buying momentum.

On a broader perspective, hammer occurrence at 0.8469 levels that takes-off rallies decisively above EMAs, bulls in major trend prolong range-bounded trend.

While both leading & lagging oscillators are quite indecisive but bullish bias.

Prior to which bulls attempted to breakout prolonged range-bounded trend on this timeframe but gave up 11-years highs. In this bullish journey,  the pair has recovered its gains in just 2-months (i.e. the rallies that were wiped off from the last 6-months).

The prevailing prices have settled in the lower range between the 0.9500 highs around 0.9200 lows. A decline through 0.8975-0.8930 is needed to suggest a deeper setback towards 0.8750–0.8600 is developing.

Overall, we are monitoring current price action to determine whether the move to 0.9500 was a false break of the medium-term range highs, or whether we test above 0.9802 level.

Trade tips: On trading perspective, at spot reference: 0.8950 levels, contemplating above explained technical rationale, it is advisable to trade one-touch call option strategy using upper strikes at 0.9050 levels, the strategy is likely to fetch leveraged yields as the underlying spot FX keeps spiking further towards upper strikes on the expiration.

Alternatively, ahead of ECB monetary policy that is scheduled today, long hedges via EURGBP CME futures of June deliveries are activated with an objective of arresting foreseeable upside risks.