FxWirePro: GBP/CHF correction phase ends – stay on with diagonal debit call spreads as uptrend likely to resume

We've been successful in tracing out trend reversal on GBPCHF as last week we rightly stated that EOD and weekly technicals raises a caution for ongoing short term downtrend as dropping prices do not evidence corresponding volume confirmation and there was a sense of divergence evidenced on RSI curve to the rising prices. Now look at the price recoveries in this pair, we now believe uptrend would be healthy even though some minor corrections in between.

As there is intraday buying trend is on with positive technical indications, we see buying opportunities in binary calls for a targets of 15-20 pips.

The pair should remain in a choppy range now but no harm for long term uptrend. So, our recommendation would be buying 2M (-1.5%) In The Money 0.60 delta calls and simultaneously writing near-month (2%) Out Of The Money puts. The delta of combined position should be at around -0.22.

This strategy is typically employed when the options trader is bullish on GBPCHF over the longer term but is neutral to mildly bearish in the near term.