AUD/USD technicals & trade setup

FX:AUDUSD   Australian Dollar / U.S. Dollar
135 1 4
AUD/USD prevailing upswings breaks 61.8% Fibos but major bear trend seems intact at 21EMA - longs on CCS             on efficient functionality:

After break out of resistance above 0.7209 (61.8% Fibos) and 7DMA levels, the prices now testing resistance at 0.7245 levels.

While leading oscillators signal bullish momentum in these upswings. RSI is trending above 41 levels and stochastic curves evidence %K cross over above 20s which is oversold region.

But the lagging indicators are not completely favourable to the upswing sentiments as the current prices have still remained well below 21DMA and MACD has also remained within bearish territory.

At the juncture of 0.7245 levels we had traced out a "dragon fly" doji which is at the troughs of the downswings but could not much, slipped down through 7DMA in the recent past.

On broader perspectives, the intermediate rallies have completely halted at 21EMAs, Spinning Top appeared at stiff resistance 0.7838 & 0.7651 levels, as a result we've seen a bearish candle with big real body in this month.

Major downtrend restrain below 21EMA: As rallies are constrained at 21EMA on weekly chart as well, that is where bulls have halted and turned around to resume bearish business to signal major trend continuation (see weekly charts).

We kept urging for our bearish targets 0.7029 as well as the retest of 0.6935 in the weeks to come.

However, on intraday perspectives it is now testing resistance at 0.7245 levels momentum offered by RSI and stochastic curves, upon breach of this level above then these upswings may extend upto 21DMA or 0.7291.

Exactly a week ago, we had suggested Credit call spread option strategy, and it reads this way,

long in 1M (1%) OTM 0.36 delta call while writing 1W (1%) ITM             call with positive theta and delta closer to zero (both sides use European style options),

The short side of this strategy would have fetched certain yields as the underlying spot rates are flashing at 0.7241 levels, which means premiums received from short side can be comfortably pocketed in.

Now is the time for the effective functionality of longs with 1M expiries as you can see every upswings in this pair would be helpful in deriving positive cashflow .

Trade expected that the underlying spot price to drop to ITM             strikes on expiration which has evidenced already and hereafter as anticipated bounce back again would be taken care of long sides.

For more readings on our strategy in the previous write up, please follow bellow link:

Well, the pair is still holding stronger at where we advised in the morning..(i.e. 0.7245).
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