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FxWirePro: EUR/JPY Chartpack – Technicals, Trade and Hedging Setup

EURJPY’s both minor and intermediate trends have been sliding through sloping channel (refer 4H and weekly plotting) 

The minor downtrend resumes bearish sentiments on bearish engulfing and doji formations at channel resistance (at 120.279 and 120.403 levels respectively on 4H chart). 

For now, more slumps likely as current price slides below DMAs as both leading oscillators substantiate selling sentiments coupled with the current price slide below SMAs with bearish MACD crossovers.

On the intermediate trend also, bullish engulfing evidences price rallies upto channel resistance but now the upswings appear to be edgy upon the occurrence of shooting star at 120.789 levels as RSI indicates faded strength at this juncture (refer weekly chart). The failure swings likely to bring in a renewed weakness again. For now, the current trend appears to be weaker, the weakness in the major trend remains intact on the monthly terms as the overbought pressures have begun and MACD remains in bearish territory which is below equilibrium level.

Trade tips: On trading perspective, at spot reference: 119.974 levels, contemplating above technical rationale it is advisable to snap deceptive rallies and construct tunnel options spread, using upper strikes at 120.077 and lower strikes at 119.864 levels, the strategy is likely to fetch leveraged yields as long as the underlying spot FX keeps dipping but remains above lower strikes on the expiration.

Alternatively, we advocated shorts in futures contracts of mid-month tenors with a view to arresting potential dips, since further price dips are foreseen we would like to uphold the same strategy ahead of Eurozone PMIs that is scheduled for this week.

By Niranjan Patil
  • Market Data
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