FxWirePro: EUR/NZD minor trend slides below DMAs, major trend spikes through ascending channel – Trading and hedging setup

The minor trend of EURNZD has been edgy especially after the formation of shooting star and spinning top at 1.7376 and 1.7517 levels respectively, ever since then the pair has constantly been dipping below, the current price has now slid below 7-DMAs with bearish DMA & MACD crossovers (refer daily chart). 

RSI and stochastic curves are showing downward convergence to the prevailing price dip which is an indication of strength and intensified bearish sentiments in the minor trend. To substantiate this stance, MACD and DMA have shown bearish crossover that indicates downswings to prolong in near-terms.

Contrary to that, on a broader perspective, the major trend of this pair has developed the rising channel pattern.

Although interim downswings observed to slide below EMAs again with bearish EMA and MACD crossovers on gravestone doji and shooting star patterns, the pair has managed to take support at the midway of 1.6311 levels (refer monthly chart), both momentum oscillators have shown strength in the major uptrend.

Trade tips: On daily trading grounds, at spot reference: 1.7108 levels, we advocate trading one-touch put option using lower strikes at 1.7050 levels. The strategy is likely to fetch leveraged yields as long as the underlying price keeps dipping towards lower strikes on the expiration.

Alternatively, as we could foresee downside risks in the near terms ahead of ECB’s monetary policy, on hedging grounds, we advocate initiating shorts in EURNZD futures contracts of near month expiries and longs in mid-month tenors with a view to arresting further upside risks.