AUD/USD Chartpack - Technicals & Trade Setup | January 29, 2019

Spot on AUD/USD’s indecisiveness despite hammers, sloping channel and double top – Trade tunnel spreads and short hedge:

Technical glance:  AUDUSD  minor trend slides back in the sloping channel after the occurrences of bearish pattern candlesticks , like, shooting star , hanging man & spinning top at channel resistance.

Although bulls of this pair began this new year by attempting to bounce back upon hammer candle at 0.7005 level, failure swings have again been observed exactly at channel resistance.

Shooting stars have occurred at 0.7337, 0.7256, 0.7197 and 0.7254 levels (refer daily plotting).

As a result, the current trend now seems to be indecisive on the above-stated both bullish and bearish formations at channel resistance and support zones amid interim bullish swings but for now, the ongoing rallies are not in conformity to the technical indicators, failure swings are most likely to resume downtrend on the bearish DMA &MACD crossovers.

AUDUSD on a broader perspective: The major trend has been extending double top formation with a breach below the neckline and likely to head towards 1 and a half year lows (refer monthly plotting), bearish engulfing candle followed by shooting star patterns plummet prices well below 7EMA and hammer has occurred at 0.7114 levels to bounce back.

While both RSI and stochastic curves have constantly been indecisive on this timeframe as well to signal both bullish and bearish momentum. While the trend indicators have also shown indecisiveness amid mild upswings indication.

Trade tips: On trading perspective, at spot reference: 0.7171 levels, capitalizing prevailing upswings, it is advisable to execute tunnel spread strategy with upper striking options at 0.7203 and lower strikes at 0.7140 levels, the strategy is likely to fetch leveraged yields as long as underlying spot FX keeps dipping but remains well above lower strikes on the expiration.

Alternatively, on hedging grounds, ahead of Fed and RBA monetary policies, we advocate shorting futures contracts of mid-month tenors as the underlying spot FX likely to target southwards below 0.70 levels in the medium run. Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.

Currency Strength Index: FxWirePro's hourly AUD spot index is inching towards 127 levels (which is bullish ), while hourly USD spot index was at -116 ( bearish ), while articulating (at 04:54 GMT ).