AUD/USD is spiking quite often ever since the recently occurred “Dragon fly Doji” pattern to break resistance at 0.7366 and currently attempting to breach one more resistances at 0.7508 levels.
Since all leading and lagging indicators are favoring short-term bulls, we reckon the pair to extend more potential in the trading sessions to come.
On intraday terms, and noise with strong momentum to signal buying pressures as they are converging to the on-going upswings both on daily as well as monthly charts.
But we could only foresee upswings up to 0.7651 levels, that’s where bulls have tested and rejected at strong resistance.
Any failure swings from there have collapsed to the support back again at 0.7421 several times in the recent past as well.
As you can observe volumes are fading on every rise in price, which is another substantiation of failure swings (bears shrugging off these upswing rallies but can be extended up to 0.7651).
On a speculative basis, one can use below option trading strategy, if the pair does not manage to hold onto 0.7651, then 0.7412 in near terms is quite a possible bet.
Fx Option Trading Strategy:
Favor optionality to directional trades. We are inclined to position for a slight jump and a partial retracement of the down move through put spreads, as calling the bottom is difficult and adding directional spot exposure is risky at the moment.
Credit Put spreads are preferred to vanilla structures given elevated skew and favorable cost reduction.
Buy AUDUSD 2W put spread with strikes of 0.7651/0.7299 for a net credit.
The net delta of the position should be around 15 (0.7651 strike = -0.90 delta, 0.7299 strike = -0.75 delta) and selling the near leg ( ITM strikes) likely to add certain yields and to finance the cost of the OTM put by almost close to 100% with ideal risk-reward.