Technical chart and patterns: GBPUSD (cable) has formed patterns at 1.3106 and 1.3157 levels on daily and at 1.3755 levels on monthly plotting.
The minor trend has developed the sloping channel previously (refer ).
For now, although cable’s current price sentiments are attempting to build on the rebound from the lows of 1.2373 regions, the sentiments in the minor trend is now hampered on above-stated patterns.
To substantiate this stance, both the momentum and trend indicators are indicating strength and intensified selling momentum as it hits 3-week lows. Both DMA & crossovers indicate downswings to prolong further to approach previous channel resistance.
On a broader perspective, we saw the resumption of major downtrend after brief consolidation phase, slumps below EMAs are observed upon formation.
For now, the trend is on the verge of retracing 78.6% Fibonacci levels as both leading and lagging indicators in tandem with selling sentiments & crossover.
Overall, bulls for the day are attempting to show some minor rallies but remember they can be deceptive as the upswings are likely to be restrained at 1.2896 (i.e. 7-DMA levels).
Trade tips: Well, on trading perspective, at spot reference: 1.2864 levels, contemplating above-explained technical rationale, it is advisable to trade barrier option strategy using boundary strikes, upper strikes at 1.2896 and lower strikes at 1.2830 levels, the strategy is likely to fetch leveraged yields as long as underlying spot FX remains between these strikes on expiry duration.
Alternatively, on hedging grounds, shorting contracts of mid-month tenors were advocated, now we wish to uphold the same position as the underlying spot FX likely to slide southwards 1.2424 levels in the medium terms.
Writers in a contract are expected to maintain margins in order to open and maintain a short position.
Currency Strength Index: FxWirePro's hourly GBP spot index is inching towards -36 levels (which is ), while hourly USD spot index was at -34 (mildly ) while articulating (at 04:36 GMT ).