FxWirePro: EUR/USD Interim Exhausted On OB Pressures, Major Downtrend Still In Sloping Channel – Trading & Hedging Setup

EURUSD’s renewed bullish sentiment extended from 1.0727 through 1.12 levels, but for now seems to be drained as the bulls drift through overbought pressures. 

While the occurrence of shooting star at the peaks of rallies and failure swing at the stiff resistance attempt to nudge prices below DMAs as both leading & lagging indicators are in line with the bearish price sentiments (refer daily chart).

Prior to which, triple bottom assists in breakout above 100-DMAs to bring-in bullishness, but that is little weaker now. Please beware of any breakdown below 21-SMAs that will resume bearish business again.

As stated before, the next major resistance zone is observed at the 1.1383 areas. If we head straight up to that region, we would expect it to at least cap the short-term move. Intra-day support lies in the 1.1275 region. A decline through there suggests a lower highs on prevailing overbought pressures.

On a broader perspective, bulls are on the verge of 3-months highs, while the major downtrend still remains intact below 50% Fibonacci retracement levels (refer monthly chart), we still await confirmation of whether 1.0635 was a more significant low for a move up to and through 1.1495, or whether price action between these levels is merely a correction phase before an attempt to test parity. Both leading & lagging oscillators seem to be indecisive on this timeframe.

Trading tips: At spot reference: 1.1243 levels (while articulating), although we see some cushion at 7 & 21-DMAs for today, contemplating short-term technical that indicates intraday selling sentiments, one can execute tunnel options spread strategy. Such exotic option with upper strikes at 1.1293 and lower strikes at 1.1168 levels likely to fetch exponential yields than the spot moves. The strategy can get assured yields as long as the underlying FX keeps dipping but remains well above lower strike.

Alternatively, we recommended shorts in EURUSD futures of July’20 delivery for the major downtrend, we now wish to uphold these positions on hedging sentiments.