FxWirePro: EUR/USD bears extend 1Y lows on failure swings at channel resistance, trend retraces 50% Fibos – Trade tunnel spreads

As per our EURUSD long-term analysis, the major trend has been sliding through sloping channel (refer monthly chart).  

As you could easily observe, the shooting star pattern pops-up at channel resistance, ever since then you could make out steep slumps below EMA levels and retraced more than 50% Fibonacci levels of January 2018 highs (i.e. 1.2612) and January 2017 lows (i.e. 1.0371 levels). 

The current price slides well below 7EMA as both leading oscillators signal bearish momentum, bears are likely to extend 1-year lows and to retrace 61.8% Fibonacci levels from 2018 highs.

We also highlight 1.0340 as a major low, which bottomed-out the cycle from the 1.60 highs in 2008. We foresee the current medium-term pullback as corrective and expect a broader range to develop. Ultimately, the charts signal an eventual move back towards 1.30-1.35 and then 1.45-1.50 levels.

On a minor trend, shooting star patterns pop-up at stiff resistance (at 1.1756), consequently, bears managed to breach decisively below strong support (at 1.1519 levels) with stern bearish candle with big real body, for now, more slumps likely on bearish DMA & MACD crossovers. 

At spot reference: 1.1407 levels, capitalizing on prevailing bearish momentum, one can bid upper strikes at 1.1460 and short lower strikes at 1.1365 levels to construct tunnel options spread, the strategy is likely to derive exponential yields as long as the underlying spot keeps dipping but remains well above lower strikes on expiration.

On hedging grounds, initiate shorts in futures contracts of mid-month tenors with a view to arresting bearish risks.

Currency Strength Index: FxWirePro's hourly EUR spot index is inching towards -66 levels (which is bearish), while hourly USD spot index was at 122 (bullish) while articulating (at 06:11 GMT). For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex

These indices are also conducive to the above-stated trading strategy.