FxWirePro: CRBS for risky traders on GBP/AUD continued streak of uptrend

Technical Watch:

One can observe from the daily technical charts, the price behavior has been lingering with the below channel line where it has been consistently finding supports and bouncing towards north, thus far we have also been firm on our earlier targets of 2.2085 levels as continued uptrend is foreseen until those levels. It is a clear rounding bottom considering previous downtrend on monthly charts of GBPAUD, hence saucer pattern to prolong in long run which should evidence a long term uptrend. While we were designing long term hedging framework 14 week RSI was used with an objective to track price momentum over medium to long term perspectives. Despite the strength index curve approached 80 levels (i.e. overbought territory) it was moving in convergence with rising prices. For a swing trader it is all too easy to be carried away by a market that apparently knows no bounds. While slow stochastic on the other hand has remained in overbought territory and it is signifying slight indecision but there is no harm for strength in current prices.

Currency Option Strategyt: Call backspreads

Since moderately bullish trend is anticipated in medium term so we set a target price for the bull run to go beyond current levels of 2.1645, so utilize below bull spreads to reduce risk. While maximum profit is capped for these strategies, they usually cost less to employ.

Buy 1M (2%) 2 lots of out of the money 0.40 delta calls, on expiry that would discount everything high impact news scheduled in September month while shorting (-1.85%) in the money calls with comparatively shorter expiry, place this position observing short term corrections..

Caution: Maximum loss for the call back spread is limited and is taken when exchange rate of GBPUSD at expiration is at the strike price of the long calls purchased. At this price, both the long calls expire worthless while the short call expires in the money.