As anticipated earlier the pair retraced upto the previous channel line distance on EOD charts, currently trading near channel line support back again at around 1.5556 levels.
%K line crossover below 20 levels seems most likely on slow stochastic curve. (%D line at 14.8289 & %K line 11.3350).
RSI (14) began showing downward price divergence currently trending at 48.3513.
We could foresee serious declines it the above support levels breaches, otherwise all chances of bouncing back upto 1.58 levels.
Trading and Hedging Perspectives: Currency Option Roundup: GBP/USD
As a whole intermediate trend being downtrend for this pair, on hedging basis we would still remain little bearish bias. Therefore, bear spreads can be deployed at this juncture using ATM puts.
However, one can see buying opportunities with speculating mindset in binary puts of this pair may fetch around 25-30 pips with ease and instantly, but the idea has to be buy at dips.
On short to medium term hedging grounds, we advocate bear put spreads with combined -0.45 delta and theta should be close to zero.
Buy (1%) In-The-Money -0.81 delta puts, simultaneously short (-1%) Out-Of-The-Money put with positive theta values for a net debit.
