EUR/USD Chartpack - Technicals & Trade Setup | February 20, 2019

EUR/USD hammer takes-off rallies above 7-DMAs, major downtrend resumes at channel resistance – Trade one-touch calls and short hedge:

EURUSD  forms hammer patterns candle at 1.1290 levels, ever since then the bullish streaks are observed 3 days in a row. The interim upswings are backed by momentum indicators; the current prices are spiking above 7-DMAs to fall back in range (refer daily chart ).

While the major downtrend has been sliding through the sloping channel, where bears retrace 61.8% Fibonacci levels from 2018 highs on the failure swings at channel resistance as both leading oscillators signal bearish momentum (refer monthly chart).

Shooting star pattern pops-up at peaks in the major trend, ever since then you could make out bears have shown their effects, steep slumps have gone below EMA levels and retraced more than 61.8% Fibonacci levels of January 2018 highs (i.e. 1.2612) and January 2017 lows (i.e. 1.0371 levels) (refer monthly chart).

Overall, the current minor trend seems to be little bullish but still remains well below 21-EMAs despite today’s rallies in a short-run, bears are most likely to extend 1 and half year lows.

We could foresee more slumps on cards as both leading oscillators ( RSI and stochastic curves) and both trend indicators (EMAs & MACD ) have been signaling intensified bearish momentum and downtrend continuation respectively.

Trade tips: At spot reference: 1.1338 levels, contemplating above technical rationale, one can execute one-touch call options strategy. Such exotic option with upper strikes at 1.1363 levels likely to fetch exponential yields than spot moves.

Alternatively, shorting futures of mid-month tenors are advocated with a view of arresting further potential slumps. 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 EUR spot index is inching towards 25 levels (which is mildly bullish ), while hourly USD spot index was at -70 ( bearish ) while articulating (at 05:54 GMT ).