FxWirePro: NZD/USD bulls back in action on trendline support but major downtrend remains intact – DNT options to trade and short hedge

Technical chart and candlestick patterns: NZDUSD bulls have been spiking higher upon the trendline support at 0.6556 levels (refer 1H chart). The minor trend has tested support at 0.6490 levels, ever since then, the bulls have been attempting to counter the previous steep bearish streaks when the rallies failed at 0.6672 levels.

For now, the current price spike well above SMAs with bullish crossovers, attempting to breakout stiff resistance at 0.6604 areas.

On a broader perspective, bulls have tested up-trendline support and bounce above 7EMAs.

But, can it be a bullish reversal in the major terms is still dubious. In the short run, more rallies seem to be on cards upon bullish SMA & MACD crossovers and the intensified buying momentum signaled by both leading oscillators on the daily time frame. 

RSI and Stochastic curves show upward convergence to the prevailing bullish rallies signal the strength and the intensified momentum in the ongoing interim uptrend.

However, although the interim bulls attempt to bounce but restrained at 21-EMA levels (refer monthly plotting), While bears likely to extend further on triple top formation.

Observe steep slumps below EMAs on breach below the neckline on this timeframe, this reminds us of the major downtrend as both leading and lagging indicators are still bearish bias in the major trend.

Trading tips:Contemplating above technical rationale in order to participate in the current uptrend but not to buck the major trend, those who are aggressively looking at this pair are advocated to trade 1w double no-touch barrier options with strikes at 0.6660 and 0.6550 levels, this would bring-in leveraged and certain yields as long as the spot FX remains between these two strikes on expiration.

Alternatively, we foresee major downtrend continuation up to 0.64 levels, shorting futures of mid-month tenors have been advocated ahead of RBNZ monetary policy with an objective 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 NZD spot index is inching towards 16 levels (which is mildly bullish), while hourly USD spot index was at -71 (bearish) while articulating (at 05:51 GMT).

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