EUR/CHF pops up with shooting star & doji to signal OB pressures

FX_IDC:EURCHF   歐元 / 瑞士法郎
127 0
EUR/CHF pops up with shooting star and long legged doji to signal overbought pressures – Boundary binaries to trade and hedge via collars:

As stated in our previous write up, the upswings of EURCHF is restrained at around 1.1550 marks (the levels that we referred as the stiff resistance). For now, the trend goes non-directional with struggling momentum.

Ongoing price rallies are likely to reject at the same resistance levels. Subsequently, the range bounded trend is most likely, should the bearish swings resume.

Ever since the rejection of the recent highs of 1.1537 levels (just 13 pips away from our resistance levels, it is deemed as intraday buying sentiment while the short term trend of this pair has been weaker.

On the contrary, despite the lingering bearish sentiments, the pair still manages to break-out long lasting range bounded trend and maintain its 2 and a half years highs.

Despite the uptrend in the last couple of months, a long legged doji has formed at 1.1423 levels in the previous month’s candle.

MACD on the daily term is not a strong signal of bullish trend continuation, instead, this lagging oscillator has signaled price dips to prolong further.

While RSI signals the fading strength in rallies on both daily as well as monthly terms. Stochastic curves have been indicating overbought sentiments.

Overall, the non-directional trend likely to persist on a broader perspective.

Well, contemplating the tight range for the day, at spot reference: 1.1455, boundary binaries are advised with upper strikes at 1.1485 (next strong resistance) and lower strikes at 1.1396 (21DMA level). Thereby, trading between these strikes likely to derive certain yields in this puzzling trend and more importantly these yields are exponential from spot movements.

Speculating between 80-90 pips, these options would be exercised if the forward prices to remain between both strikes (i.e. 1.1485 > Fwd price > 1.1396).

Alternatively, contemplating major uptrend sentiments and short term struggle for the momentum, anyone who wishes to carry long EURCHF exposures, a collar options trading strategy is recommended. This could be constructed by holding the total number of units of the underlying spot FX while simultaneously buying a protective put and shorting call option against that holding. The puts and the calls are both OTM options having the same expiration month and must be equal in a number of contracts.
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