FxWirePro: GBP/JPY calls ratio spread as trend to remain sideways or slightly bullish

Although EOD chart suggests some bearish signals such as shooting star appeared at 194.222, this should not be deemed as reversal as leading oscillators moving in convergence with the stagnant range 194.363 to 192.288 from 5-6 trading days.

And in addition to this, RSI and stochastic signals bull run or sideway trend is likely to continue on weekly and monthly charts, rising prices are confirmed by convergence shown by RSI. On a closing basis 193.458 holds an immediate strong supports.

Trend overview: Sideways or slightly bullish

As a result of above technical observation we look ahead for slight dips in the near future but sideways to uptrend holds stronger. More importantly implied volatility of near month ATM calls for this pair is seen at 7.7% which is quite lower side and it is expected to lower further.

It has been closely monitored the UK's fundamentals and its currency fluctuations, uptrend on GBPJPY is intact and but we also reiterate any necked positions are not advisable at this juncture since GBPJPY is moving in the puzzling zone towards south. We therefore recommend "call ratio spread" as the pair is likely to remain either sideways or slightly bullish in our view.

Buy far month In-The-Money 0.50 delta call option and sell more near month Out-Of-The call option at a higher strike price. Buying call spread in addition to selling more necked call options constitutes this hedging position.