FxWirePro: GBP/CHF Upswings Likely to Extend - Diagonal Debit Spreads to Hedge, Binary Calls to Speculate
The pair seems to be in healthy bull run, especially after clearing minor resistance at 1.3903 levels.
Current prices have bounced above DMA curves on daily charts, and for now targeting to hit 1.4143 resistance levels.
For now, buying signal generated by moving average lagging indicators as 7DMA crosses over 21DMA.
This bullish environment is substantiated by leading oscillators.
RSI converges to the rising prices both on daily and weekly graphs.
While, Stochastic oscillator signals bullish momentum as there is no trace of %D line crossover even after 80 levels which is overbought territory.
On weekly plotting, ongoing uptrend is extremely robust that signalled particularly by RSI and Stochastic.
We think the decisive breach above 1.4143 levels would most likely to set a new bullish trend and to expose towards 1.4492 levels, otherwise retest of support at 1.3903 can also not be disregarded.
Prices also evidence corresponding volumes along with this upswings on weekly basis.
GBP/CHF should be bullish bias, else remain in a choppy range now but certainly not a shorting option for now.
Option trade set up: Since 1W ATM IV of this pair is on lower side, at around 7.54%, we see opportunities in shorting deep out of the money options, hence the below recommendation is the best suitable.
So on hedging grounds, go long in 1M (1%) In-The-Money 0.62 delta call and simultaneously writing 1W (1%) Out-Of-The-Money call.
This strategy is typically employed when the options trader is bullish on the underlying exchange rate over the medium term but is neutral to mildly bearish in the near term.
But on speculative grounds, as there is intraday buying trend is on with positive technical indications, we see buying opportunities in binary calls for a targets of 20-25 pips.