AUD/USD Chartpack, Trading & Hedging Setup
AUDUSD’s minor uptrend resumes upon the test of strong support of 100-DMAs, bulls have travelled more than 200 pips (i.e. from 0.7005 to 0.7209 levels).
For now, extension of rallies is possible only above 21-DMA levels, both leading oscillators show the upward convergence to the prevailing upswings to signal strength and buying momentum (refer daily chart).
On a broader perspective, 100-EMAs cap the attempts of upswings, while bears drag price slumps on the breakdown below double top neckline (refer monthly chart). Although, you could see bounce-back but the last month’s price plunge reminds major downtrend.
Both RSI & stochastic curves show the overbought pressures to indicate the intensified selling momentum. To substantiate this bearish stance, the current price still remains in bearish trajectory of MACD that indicates the downtrend may prolong further.
The Aussie dollar, as a proxy for the global risk sentiment, and also for China’s growth outlook amid contagious coronavirus outbreak, will continue to remain under downward pressure.
Trade tips: On trading perspective, contemplating above technical rationale, at spot reference: 0.7182levels, it is advisable to execute tunnel options strategy with upper strikes at 0.7209 and lower strikes at 0.7129 levels, thereby, one can fetch certain yields as long as the underlying spot FX keeps dipping but remain above lower strikes on the expiration.
Alternatively, on hedging grounds we advocated shorting futures contracts of mid-month tenors, we wish to uphold the same strategy as the underlying spot FX likely to target southwards below 0.69 levels in the medium run. Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.
For now, extension of rallies is possible only above 21-DMA levels, both leading oscillators show the upward convergence to the prevailing upswings to signal strength and buying momentum (refer daily chart).
On a broader perspective, 100-EMAs cap the attempts of upswings, while bears drag price slumps on the breakdown below double top neckline (refer monthly chart). Although, you could see bounce-back but the last month’s price plunge reminds major downtrend.
Both RSI & stochastic curves show the overbought pressures to indicate the intensified selling momentum. To substantiate this bearish stance, the current price still remains in bearish trajectory of MACD that indicates the downtrend may prolong further.
The Aussie dollar, as a proxy for the global risk sentiment, and also for China’s growth outlook amid contagious coronavirus outbreak, will continue to remain under downward pressure.
Trade tips: On trading perspective, contemplating above technical rationale, at spot reference: 0.7182levels, it is advisable to execute tunnel options strategy with upper strikes at 0.7209 and lower strikes at 0.7129 levels, thereby, one can fetch certain yields as long as the underlying spot FX keeps dipping but remain above lower strikes on the expiration.
Alternatively, on hedging grounds we advocated shorting futures contracts of mid-month tenors, we wish to uphold the same strategy as the underlying spot FX likely to target southwards below 0.69 levels in the medium run. Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.