FxWirePro: EUR/USD Shooting Stars Pop-Up At 100-DMAs To Cap Interim Upswings And Remind Major trend – Trade & Hedging Setup

EURUSD has attempted for recovery rallies several times in the recent time past, but frequent shooting star patterns pop-up at 100-DMA to cap the interim uptrend and drag major downtrend.

While both leading & lagging oscillators are indecisive but mildly bullish at this juncture, as a result, bulls are capitalizing on the interim buying momentum but anything above 100-DMAs with bullish crossover would be more clarity. 

So far we have failed to break through the 1.0845 - 1.0945 resistance region. The longer that holds, the greater the risk of renewed weakness. A clear break though should see a further recovery within the broad 1.0635 to 1.1165 range. Back through 1.0790-1.0760 support would return a more negative bias again for a move down to test 1.0635-1.0580 important support below.

On a broader perspective, the major downtrend has been extending below 61.8% Fibonaccis and retraces up to 78.6% levels (monthly chart), both leading & lagging oscillators are in line with price slumps on this timeframe.

Overall, the major downtrend still looks robust and accordingly, we advocated short hedges for EURUSD about a month and a fortnight ago when this was trading at 1.0904 level, we now continue to maintain the same strategy on hedging grounds.

The Strategy: At spot reference: 1.0945 levels (while articulating), although we could see some ongoing rallies for today that seems momentary, contemplating above technical rationale, one can execute boundary options strategy. Such exotic option with upper strikes at 1.0976 and lower strikes at 1.0860 levels likely to fetch exponential yields than the spot moves.

Alternatively, we recommended shorts in EURUSD futures of May’20 delivery for the major downtrend. Ahead of Eurozone PMI data announcement that is scheduled for this week, we now wish to uphold these positions on hedging sentiments.