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Watch out for more AUD/NZD dips as upswing snubs at 7DMA

FX:AUDNZD   Australian Dollar/New Zealand Dollar
77 0 3
See more bearish potential on rejection below resistance at 1.0782 levels (7DMA), currently the pair is just 10 pips away from crucial support at 1.0750 levels.

Earlier, the rejection below resistance from 1.1243 levels, the pair has broken major supports at 1.1050 and 1.0957 levels with ease.

As a result, the prices have slid below DMAs and they are slipping through 7DMA.

7DMA crosses way below 21DMA which is interpreted as no signs of immediate recoveries, instead expect either sideways or drift below.

Although prices have bounced a bit, we see no significant indications of momentum in rallies by leading oscillators.

Daily RSI is converging clearly to the declining prices approaching near oversold region, while slow stochastic curves have reached oversold region and still no signs of recoveries.

Lagging indicators are also substantiating the same view.

MACD evidences bearish crossover and has just entered into zero level which is again a bears’ zone.

Same is the case on monthly plotting, we see no deviation from daily analysis , major trend is moving in sideways to slightly weaker.

You can see whipsaws on 7 & 21EMA curves from last couple of months but dropping prices below EMAs with considerable volumes creation. Leading oscillators on monthly are indicative of weakness in this pair.

Trade Tips: 

On intraday terms, pondering over above technical reasoning, it is good to buy the option tunnel using ATM puts is structured as a binary version of a conventional put spread, i.e. long delta puts with higher strikes while writing the lower strikes for above mentioned targets on either side.

Therefore an In-The-Money tunnel would be formed of an In-the-money -0.75 delta put below the current exchange rate less an Out-Of-The-Money put above the exchange rate. The delta of -0.55 on combined position with slightly negative theta is preferred on this execution.

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