FxWirePro: October series ensure EUR/USD’s non-directional trend after massive tumble below DMAs – Stay short via tunnel spread on prolonged bear swing

The dollar has begun the trading week’s extended gains after the rejection of today’s highs of 1.1037 levels, and the pair rejects the resistance at 1.1279 levels (it has tested resistance several times in the recent past).

Thereby, the major non-directional trend likely to prolong further as bears resume after last months gains (see monthly charts).

Despite attempts of today’s upswings the current prices have remained well below and 7DMA crosses below 21DMA, the major trend drifting through sideways.

The next immediate supports are seen only at 1.0968 levels.

RSI (14) on daily is converging to the current dips and being bearish bias. The environment has resulted in the selling momentum as this leading oscillator is yet to approach oversold territory by taking the computation of last 14 day periods the magnitude of recent gains to recent losses in an attempt to signify the selling pressures.

While slow stochastic curves are highly indecisive to signal clear trend direction as it there is no %K crossover.

We think the pair from here onwards largely bearish, and advisable to capture the current rallies to deploy shorts is a wise trading idea, then the next targets would be seen at 1.0968 levels in the days to come.

Long-term investors should be cautious, even if it holds the current levels, we see restricted upside potential at 21EMAs, at this juncture momentum in previous rallies likely to collapse; long term non-directional trend seems intact. Hence, in long run, we still project below cyclical lows 1.10 but between the range of 1.08-1.09 by the Q1'2017 end.

On intraday speculation purpose, one call buy tunnel spreads on every rally but failure swings do not encourage these trades, thus, be mindful of 7DMAs (capture higher binary strikes for shorts and stay long in binary puts with lower strikes). This strategy seems best suitable on speculative grounds for certain yields but with leveraging effects. This is just for an intraday trading perspective, but in long run, this is certainly not yet an ideal time for fresh longs.