FxWirePro: EUR/NZD triple top signifies minor downtrend, major uptrend on rising channel – Trade tunnel spreads and directional hedges

The minor trend of EURNZD has been quite jittery, the pair has formed a triple top pattern with top 1 at 1.7260, top 2 at 1.7307 and top 3 is at 1.7278 levels (refer daily chart).

Where bearish engulfing candle has occurred in the recent past at 1.7133 level that hinders momentary upswings, consequently, the current price below 7DMA is reasonable.

While both technical indicators (momentum and trend oscillators) are in tandem with the minor downtrend. RSI and stochastic curves have shown downward convergence to the price dips which is an indication of strength and intensified bearish trend. To substantiate this stance, MACD has shown bearish crossover entering the bearish territory that indicates downswings to prolong in near-term.

Contrary to that, on a broader perspective, the major trend of this pair has developed a rising channel pattern.

The pair has taken support at the midway of 1.6311 levels (refer monthly plotting), as a result, the current major trend spikes above EMAs again with bearish EMA and MACD crossovers, both momentum oscillators have been extremely bullish bias on this timeframe.

Trade tips: On daily trading grounds, at spot reference: 1.7135 levels, we advocate constructing tunnel spread, using upper strikes at 1.7150 and lower strikes at 1.7115 levels. The strategy is likely to fetch leveraged yields as long as the underlying price keeps dipping but remains above lower strikes on the expiration.

Alternatively, as we could foresee downside risks in the near terms ahead of RBNZ’s monetary policy, on hedging grounds, we advocate initiating shorts in EURNZD futures contracts of near month expiries and longs in mid-month tenors with a view to arresting further upside risks. 

Currency Strength Index: FxWirePro's hourly EUR spot index is inching towards 101 levels (which is highly bullish), NZD at 99 (bullish), while articulating (at 13:11 GMT).

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