FxWirePro: EUR/USD bearish engulfing and shooting star coupled with bearish crossovers develops sloping channel – Uphold short hedge

Technically, EURUSD after rejecting the peaks of rallies 1.1569 and the range resistance region, the price has been constantly sliding as lows as 1.1289.

We reiterate that EURUSD interim upswings, for today, are not backed by technical indicators; the current prices are hovering below 7-DMAs despite ongoing rallies.

As shown in the diagram, bearish patterns, such as shooting star, hanging man and engulfing candles are backed by both momentum and trend indicators to plummet price below DMAs, and prolongs range-bounded minor trend in the near terms. 

For now, we remain in the range, with 1.1390-1.1425 interim resistance. While under 1.1500, our bias remains for an eventual test and break of the 1.13 and head towards 1.1215 lows.

On a broader perspective, the major downtrend develops descending channel pattern as you could observe sloping channel pattern, retraces more than 50% Fibonacci levels from 2018 highs on failure swings at the channel resistance as both leading oscillators signal intensified bearish momentum. Both RSI and stochastic curves on both daily and monthly timeframes, show downward convergence to the prevailing price dips to signal strength and selling momentum.

While DMA, EMA and MACD bearish crossovers, on both timeframes, have also indicated downtrend to prolong further.

All these technical factors substantiate our stance on the levels around 1.12-1.10 is perceived as the most likely event and a major support region. The ideal area for a long-term higher low over the 1.0340 lows set in 2016. Notable supports within this region lie at 1.1190 and 1.1000. Further evidence is needed to prove that 1.1215 was the higher low we are looking for.

Trade tips: At spot reference: 1.1320 levels, contemplating above technical rationale, one can execute tunnel spread options strategy. Such an exotic option with upper strikes at 1.1350 and lower strikes at 1.1285 levels have been an unbiased strategy but to favor slightly the bearish sentiments. 

Alternatively, shorting futures of mid-month tenors have been advocated with a view of arresting further potential slumps, we wish to uphold the same positions. 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 EUR spot index is inching towards -75 levels (which is bearish), while hourly USD spot index was at -14 (mildly bearish) while articulating (at 06:58 GMT).

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