Technical chart and candlestick patterns: AUDUSD failure swings at the stiff resistance with hanging man and spinning top patterns plummet prices below DMAs,
For now, more slumps seem to be likely upon breach below strong supports, while both leading and lagging indicators substantiate these bearish indications (refer daily plotting).
Hanging man and spinning top have occurred at 0.7173 and 0.7178 levels respectively.
Stiff resistance – 0.7206 levels, failure swings are observed at this juncture coupled with the bearish pattern candles signal weakness.
In addition to that, this bearish pattern is coupled with a broader perspective: The major trend of this pair has been extending double top formation with breach below neckline and may head towards 3 year lows (feb’2016 lows, refer monthly plotting), bearish engulfing candle followed by shooting star patterns plummet prices well below 7EMA again on this timeframe. Attempts of upswings are restrained below 21-EMA levels.
Both RSI and stochastic curves have signaled faded strength and intensified bearish momentum as these leading oscillators show downward convergence to the prevailing price dips.
While bearish MACD and EMA crossovers substantiate the bearish sentiments and indicate downtrend to prolong further.
Trade tips: On trading perspective, at spot reference: 0.6993 levels, contemplating above technical rationale, it is advisable to execute one touch put options strategy with lower strikes at 0.6914 levels, thereby, one can achieve certain yields as long as the underlying spot FX keeps dipping on the expiration.
Alternatively, on hedging grounds ahead of RBA’s monetary policy that is scheduled for next week, we advocate shorting futures contracts of mid-month tenors as the underlying spot FX likely to target southwards below 0.69 levels in the medium run. 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 AUD spot index is inching towards -77 levels (which is bearish), while hourly USD spot index was at 19 (mildly bullish) while articulating (at 06:27 GMT). These indices are also conducive for the above short set-up.
For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex
