FxWirePro: AUD/NZD slides through falling wedge, bearish patterns pop up at every wedge resistance – Construct tunnel structure and short hedge

Chart and candlestick patterns formed: Bearish engulfing and the frequent occurrences of shooting stars on minor trend (refer daily as well as weekly plotting). The trend has been sliding through sloping channel pattern which is bearish in nature (daily chart).

Bearish engulfing has occurred at 1.0728, 1.0674 (on dailies) and 1.0847 levels (on weekly plotting) that have plummeted prices.

Shooting star patterns have occurred at 1.0608, 1.0617, and 1.0623 levels.

As a result of bearish pattern candlesticks, the rallies are constantly restrained below DMA and the current prices are well below 7DMAs again.

Since the current prices slide below 7DMAs, then expect more dips as the bearish convergence signaled by both momentum oscillators (RSI and stochastic curves) on both timeframes.

The major trend of this pair has been downtrend that has gone into consolidation phase approximately from the last three years or so.

For now, bearish bias in near-term, a 1.0235-1.1425 range likely to contain.

While in the medium term perspectives, there’s potential for a further decline towards 1.0370 levels, given the recent interest rate and commodity movements have slightly favored the NZD.

To substantiate this bearish stance, both lagging indicators (EMA & MACD) show bearish crossovers that indicate the downtrend to prolong further.

Overall, as stated before the resumption of the major downtrend is very well visible, even if you witness any abrupt upswings, that shouldn’t be deemed as panicky buying sentiment.

Instead, at spot reference: 1.0541 levels, tunnel spread which is the binary version of debit put options strategy is advocated for the intraday speculative trades, use upper strikes at 1.0564 and lower strikes at 1.0506 levels.

Alternatively, deploy short hedge using futures contracts of mid-month tenors with a view to arresting bearish risks below 1.0370 levels.

Currency Strength Index: FxWirePro's hourly AUD spot index is flashing at 69 levels (which is bullish), while hourly NZD spot index was at shy above 134 (bullish) while articulating (at 06:16 GMT). For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex.

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