FxWirePro: EUR/USD bearish trading and hedging setup as both minor and major trends slide through descending channel

EURUSD’s both minor and major trends have been traveling through sloping channels (refer daily and monthly charts).

The minor downtrend is back in the sloping channel after the occurrences of back-to-back dojis and spinning top patterns at the peaks of rallies. 

Although the bulls prompt the interim rallies but failure swings have been observed at 7DMAs as both leading oscillators signal bearish momentum and the trend indicators signal downtrend continuation. As a result, the spinning top candle has formed at 1.1146 levels.

The bearish engulfing candle has occurred at 1.1220 levels to plunge prices below DMAs again. The bulls are attempting to test strong support at 1.1107 levels for the interim upswings that are not backed by both the momentum indicators (refer daily chart).

Nevertheless, it should not be deemed as a reversal of major trend which is still bearish. 

The major downtrend has also been sliding through sloping channel, where bears retrace 61.8% Fibonacci levels from 2018 highs on the failure swings at channel resistance as both leading oscillators signal bearish momentum (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). 

Upon a foreseeable outcome, more slumps seem to be on the cards as both leading oscillators (RSI and stochastic curves) and both trend indicators (EMAs & MACD) have been signaling intensified bearish momentum and downtrend continuation respectively. 

Trade tips: At spot reference: 1.1144 levels, contemplating above technical rationale, one can execute boundary options strategy. Such exotic option with upper strikes at 1.1184 and lower strikes at 1.1101 (the recent lows) likely to fetch exponential yields than the spot moves. 

Alternatively, shorting futures of mid-month tenors have been advocated with a view of arresting further potential slumps, we now wish to uphold the same strategy. Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.