EUR/USD bulls give up after rejecting resistance at 1.1461

FX:EURUSD   Euro / U.S. Dollar
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The  euro             has started the trading week with tepid mood, extended minor gains upto 1.1419 levels but could not sustain to continue last week’s bearish sentiments again.

On a broader perspectives, the pair has dropped from the stiff resistance at 1.1461 levels (see monthly charts).

Since the pair has rejected at important resistance at 1.1461 levels by forming a resembling shooting star candle pattern to slip below 7DMA and 21EMA curves on both daily and monthly charts respectively.

7DMA has again narrowed down, signs of crossing below 21DMA.

It is currently hanging around supports at 1.1376 levels with leading oscillators to converge the current price dips. Upon the break out below this support would certainly bring in bearish environment again to evidence minimum of 25-30 pips intraday targets.

Even if it holds the current levels, we see restricted upside potential at 1.1440 levels, at this juncture momentum in current dips likely to continue, long term trend seems absolutely non-directional.

RSI (14) on daily and monthly charts generate diverging views to the sideway trend and being bearish bias (Currently, daily RSI trending below at 50s while articulating).

While %D crossover on daily right from overbought region has been maintained on slow stochastic curve with every price dips (Currently, %D line at 41.9762, while %K line at 24.7673). Stochastic on monthly curve also remains in the oversold territory but no proper trace of %K crossover that signifies weakness in the euro             .

Overall, for now we’re suspecting sustenance of bounce above 23.6% fibo levels, sideways trend lasted for more than a year.

Hence, in long run we still project below or around 1.12 (23.6% fibos) for Q2 end-2016, a cyclical low of 1.10 or below in Q3 2016.

But for intraday terms, we rely on stochastic and RSI and as they pop up with overbought pressures thus far, so smart way to approach this pair is to deploy 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 for targets of minimum 25-30 pips. On delivery terms, one can go shorts in futures contracts of mid month expiries for targets upto 100-125 pips.
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