Getting Technical: Ascending Channels

  • 18 Apr 2017
  • By Trading Central
  • Topics: FX

An ascending or bullish price channel is made of two parallel lines: the basic rising trend line (lower end of the channel) and the channel line or return line (upper end of the channel). The price channel is assigned to the category of «continuation patterns» and remains valid until either the trend line or channel line is broken.

ADAPTED OPTION STRATEGY: BULL PUT SPREAD

A bull put spread allows you to collect premium in a volatile bullish market. It is a net credit spread that is profitable as long as prices remain above the stop-loss. As a result, the strategy consists of the simultaneous purchase of a put with a Strike at 0.860 and selling a put with a Strike at 0.878.

BULL PUT SPREAD: Leg 1

Trading Symbol 6J U6
Option Type PUT
Option Strategy BUY
Strike 0.860
Expiration June 2016

BULL PUT SPREAD: Leg 2

Trading Symbol 6J U6
Option Type Put
Option Strategy SELL
Strike 0.878
Expiration June 2016

ADAPTIVE FUTURES STRATEGY

Trading Symbol 6J U6
Strategy LONG
Entry Point 0.9034
Target 0.9480
Stop Loss 0.8775
Contract Expiry September 2016

ASCENDING CHANNELS: 6J U6 MAY 31ST

ACTUAL OUTCOME

POTENTIAL GAIN PER CONTRACT

A target of 0.948 is calculated by anticipating a measured move based on the channel’s range and then projecting this range to the upside from where the Japanese Yen Futures reached the support level. Another idea is to take full or partial profit at the next major resistance level set at 0.9335.

POTENTIAL DOWNSIDE PER CONTRACT

Once the position is open, if prices fall below 0.8775 the futures position should be closed as the strategy failed to materialize.

Ascending channels happening in the markets now

6E

NG


Copyright TRADING CENTRAL
The information contained in this publication is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Any opinion offered herein reflects TRADING CENTRAL current judgment and may change without notice. Users acknowledge and agree to the fact that, by its very nature, any investment in shares, stock options and similar and assimilated products is characterised by a certain degree of uncertainty and that, consequently, any investment of this nature involves risks for which the user is solely responsible and liable.

Services in the U.S. are offered through TRADING CENTRAL Americas, Inc.

TRADING CENTRAL is not registered in France as an Investment Services Provider but complies with the following rules and directives, including:
- General Regulation Handbook of the AMF, Book III, Title III, Chapter VII "Investment Analysts Not Associated with an Investment Services Provider"
- EU Commission Directive 2006/73 dated 10 August 2006, Articles 24 and 25
- EU Commission Directive 2004/39 dated 21 April 2004
- EU Commission Directive 2003/125 dated 22 December 2003

This message is intended for recipient only and not for further distribution without the consent of TRADING CENTRAL. Although TRADING CENTRAL attempts to sweep e-mail and attachments for viruses, it does not guarantee that either are virus-free and accepts no liability for any damage sustained as a result of viruses.

About Trading Central

Trading Central is a leading provider of independent investment research to financial market professionals, specialising in the field of technical analysis. Founded in 1999, Trading Central now has offices across North America, Europe and Asia, providing research to over 200 leading investment banks, FCMs, hedge funds, brokers and exchanges in over 45 countries.