FxWirePro: EUR/USD Shooting Star Delivers As Desired, Bulls Still Hovering At 7-DMAs On Hammer – Hedging Setup

EURUSD has been sliding from the recent highs of 1.1116 to the recent lows of 1.1039 levels, thereby, the interim rallies seem to have been exhausted from the last 2-3 days upon the overbought sentiments signaled by the leading oscillators. We traced out shooting star at 1.1077 levels that has delivered its bearish effects. Prior to which, hammer has occurred 1.1015 levels, consequently, bulls of this pair seem to be hovering at 7DMAs for now.

While the major downtrend has also been sliding through sloping channel, where bears retrace more than 61.8% Fibonacci levels (almost 78.6%) from 2018 highs on the failure swings at channel resistance, as both leading oscillators and lagging indicators still signal bearish momentum, the downtrend continuation seems to be most likely (refer monthly chart).

Shooting star pattern pops-up at peaks in the major trend, ever since then you could make out bears have shown their effects, steep slumps have gone below EMA levels and retraced more than 61.8% Fibonacci levels of January 2018 highs (i.e. 1.2612) and January 2017 lows (i.e. 1.0371 levels) (refer monthly chart) but from the last couple of months bulls have held firmly. 

Accordingly, we advocated directional positions for EURUSD couple of days ago, please refer below weblink for more reading on them:

https://www.econotimes.com/FxWirePro-EUR-USD-Directional-Hedges-As-Minor-Trend-Tests-Sloping-Channel-Support-Major-Trend-Fails-At-Channel-Resistance-1565964

We now continue to uphold the strategy on hedging grounds ahead of Fed and ECB monetary policies scheduled for the next week.

The Strategy: At spot reference: 1.1062 levels, contemplating above technical rationale, we advocate longs in EURUSD futures contracts of December’19 delivery, simultaneously, shorts in futures of Feruary’20 delivery for the major downtrend. The short leg is likely to hedge potential slumps and the momentary upside risks can be arrested by the long leg. Thereby, one could be able to directionally position in their FX exposures on hedging grounds.