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AUD/USD bulls likely to extend gains upto 21DMA – bid 1m IVs

FX:AUDUSD   Australian Dollar/U.S. Dollar
115 0 6
AUDUSD             continues to gain from yesterday’s close at 0.7365 levels to the current 0.7436 levels after RBA decides to maintain status quo in its monetary policy, cash rates are unchanged at 1.75%. The bets on probable cuts from the central bank are deferred to the August meeting.

On DMAs perspective, the pair has shown substantial bounces to evidence 7DMA crossover above 21DMA which is a buy setup.

While the current prices have bounced well above DMAs.

In recent past, the traders saw the AUD recovery as anticipated especially from 30th May ever since hammer pattern candle has occurred at 0.7181 levels.

The buying momentum has been consistently confirmed by the leading oscillators.

Both RSI and stochastic indicators have been convincingly converging to the ongoing upswings.

Entry: Any dips of around 15-20 pips or to the 0.7410 levels today is perceived as a buying opportunity.

Target:  0.7467 or even up to 0.7651 in medium run.

Stop: 0.7366, initially.

Time horizon: Allow several days for the target to be achieved.

Alternatively, on speculative grounds below option strategy is recommended.

OTC             IVs and sensitivity table, we consider 1M ATM IVs that is a tad below 12.00% (11.95% to be precise) at spot FX 0.7437 levels and shrunk away to 10.7% in 1W tenors.

Well, contemplating trend, reducing IVs in short run, RBA’s deferral and dovish Fed, we subsequently, recommend the “Calendar Spread” on both speculative and hedging grounds so as to match up with puzzling swings in both short term and long term, so please monitor the following Calendar Setup:

Go short in near-month (1.5%) ITM put with positive theta or closer to zero
Go long in mid-month (1%) OTM +0.61 delta put.
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