FxWirePro: GBP/AUD bounces back on hammer formation at channel support – Trade one touch call and long hedge as more upside risks on cards

Although a mild bearish swings are observed in GBPAUD today, stern upswings have taken the current prices well beyond DMAs as the bulls have managed to break out stiff resistance at 1.7997 levels (refer daily chart).

While the consolidation phase in the intermediate trend seems to have been reinforced at rising channel support upon the bullish candlestick formations of engulfing and hammer patterns at channel support (at 1.7485 and 1.8007 levels respectively). As  a result, sharp rallies above EMAs. 

While both leading and lagging indicators on both timeframes are signalling upward convergence to the prevailing price rallies.

Momentum study: The stochastic oscillator has been popping up with buying pressures with its %k crossover which is a bullish crossover, in addition to that, RSI has also been converging upwards to the prevailing price upswings right from the oversold zone that signals strength and intensified momentum in its bullish sentiments (refer both daily and weekly terms).

Trend study: The prevailing upswings likely to prolong further upon bullish DMA, EMA and MACD crossovers (refer both daily and weekly plotting).

Trading tips:

Well,contemplating above technical reasoning, on speculative grounds we advise one touch call options favoring bullish indications. This option strategy is likely to fetch leveraged yields than spot FX if the IV of this option keeps rising and the underlying spot keeps rising.

On hedging grounds, we advocate initiating longs in GBPAUD futures contracts with a view to arresting further upside risks.

Currency Strength Index: FxWirePro's hourly GBP spot index is flashing 66 (which is bullish), while hourly AUD spot index was at shy above 43 (bullish) at 11:52 GMT. For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex