Hedge AUD/USD via debit spreads ahead of Chinese weekend data
Technical glimpse:
AUD/USD is failing quite often to break resistance at 0.7513, as a result we think since it doesn't manage to break above decisively which would likely create more bearish potential for aggressive speculators.
The failure swings have collapsed to the support at 0.7421 several times in the recent past as well.
On intraday terms, Stochastic and RSI noise with strong momentum to signal selling pressures as they are diverging to previous minor upswings.
As you can observe volumes are fading on every rise in price, which is an another substantiation of failure swings (bears shrugging off these upswing rallies).
On speculative basis, one can use boundary binary puts with ITM stikes of 20 pips above and OTM strikes 30 pips for targets of 35-40 in between pips with ease.
While on delivery basis, if the pair does not manage to hold onto 0.7513, then 0.7412 in near terms is quite possible bet.
Hedging Frameworks:
The Aussie dollar has been slowly drifting lower when the pair is attempting to hit above resistance level, in a narrow range mild Asian data season on Friday in anticipation of the release of industrial output and retail sales data from China to set the tone.
Both industrial production and retail sales in China is forecasted to drop at 5.6% and 10.9% from 5.9% and 11.1% respectively.
Subsequently, we expect AUDUSD drop again, so foreign trader whose short term payables in Aussie dollar can go opt below hedging strategy.
On a hedging perspective, debit put spreads are advocated as the selling indications are popping up on technical graph ahead of lackluster Chinese data again. So buying In-The-Money Puts and to reduce the cost of hedging by financing this long position, selling an Out-Of-The-Money put option is recommended.
So, the strategy goes this way, go long in 2W at the money -0.49 delta put, and 1W (1%) out of the money put option with positive theta for a net debit to enter the positions.
AUD/USD is failing quite often to break resistance at 0.7513, as a result we think since it doesn't manage to break above decisively which would likely create more bearish potential for aggressive speculators.
The failure swings have collapsed to the support at 0.7421 several times in the recent past as well.
On intraday terms, Stochastic and RSI noise with strong momentum to signal selling pressures as they are diverging to previous minor upswings.
As you can observe volumes are fading on every rise in price, which is an another substantiation of failure swings (bears shrugging off these upswing rallies).
On speculative basis, one can use boundary binary puts with ITM stikes of 20 pips above and OTM strikes 30 pips for targets of 35-40 in between pips with ease.
While on delivery basis, if the pair does not manage to hold onto 0.7513, then 0.7412 in near terms is quite possible bet.
Hedging Frameworks:
The Aussie dollar has been slowly drifting lower when the pair is attempting to hit above resistance level, in a narrow range mild Asian data season on Friday in anticipation of the release of industrial output and retail sales data from China to set the tone.
Both industrial production and retail sales in China is forecasted to drop at 5.6% and 10.9% from 5.9% and 11.1% respectively.
Subsequently, we expect AUDUSD drop again, so foreign trader whose short term payables in Aussie dollar can go opt below hedging strategy.
On a hedging perspective, debit put spreads are advocated as the selling indications are popping up on technical graph ahead of lackluster Chinese data again. So buying In-The-Money Puts and to reduce the cost of hedging by financing this long position, selling an Out-Of-The-Money put option is recommended.
So, the strategy goes this way, go long in 2W at the money -0.49 delta put, and 1W (1%) out of the money put option with positive theta for a net debit to enter the positions.
