FxWirePro: AUD/NZD weekly gravestone priced-in daily downswings – strips well suitable for hedging

Technical observation:

We traced out bearish gravestone doji pattern around 1.1218 levels on weekly charts in earlier post, and leading oscillators to substantiate current price fluctuations. Now the rest all is history and the current prices have shown their impact of this bearish candle pattern.

We maintain our bearish stance on this pair as the prices have been well below moving average curve that signals us long term bearish trend is on the cards. The pair has pretty much achieved  our earlier target at 1.1317, we could now foresee and maintain our next target for this pair is at 1.0949 levels towards south, RSI is currently trending near 44.5079, while %D crossover on slow stochastic above 70 levels signifies bearish momentum is continuing. Last month's diagonal strips have taken care of upswings and downswings and yielded handsome returns and we are firm onto continue with the same.

Currency Option Strategy:

The potential target on upside is about 50-100 pips where 160-200 pips on downside, options strips are to be deployed, now have a look at the diagram fro prevailing prices of ATM puts and they are moving in line with healthy delta. We've been firm to hold on this strategy on hedging grounds, unlike spreads, combinations allow adding both calls and puts at a time in our strategy.

Hold 15D At-The-Money 0.50 delta call and simultaneously hold 1 lot of 1M At-The-Money -0.50 delta put options with positive theta values and one more put option 1M At-The-Money puts after squaring off 1st option. The rationale is that any potential downswings should be optimally utilized, so to participate in that downtrend, weights in the portfolio should be doubled with ATM puts.

Huge profits achievable with the strip strategy when AUDNZD exchange rate makes a strong move either upwards or downwards at expiration, with greater gains to be made with a downward move.