FxWirePro: GBP/JPY rallies to extend further on bullish DMA crossover but major trend still edgy – Bid boundary binaries and short hedge with mid-month tenors

After breaching above 143.482 levels, more rallies on cards as short-term trend backed by both momentum and trend oscillators but the same is dubious on long term charts.

Although GBPJPY halted bull swings for the day at 143.836 levels (day high), upswings breached above stiff resistance of 143.482 despite low volume formations, rallies likely to extend upon confirmation from both leading & lagging indicators.

From last week, the upswings so far have taken the pair beyond DMAs levels and sensing consistent support at 7SMA (see 4H charts); we foresee northwards journey upto next stiff resistance at 145.546 levels.

Please be noted that stochastic oscillator has entered into overbought trajectory but no traces of clear bearish crossover which means ongoing bullish sentiments are likely to continue but with a pinch of salt. While historically, RSI has shown faded strength in rallies at 64 levels but this leading indicator has also entered into the overbought zone but showing bullish convergence.

Well on a broader perspective, shooting star at 144.328 levels on monthly plotting restrain rallies below 7EMAs, Shooting star on rallies resumes major downtrend, consequently, one can expect more rallies upto 145-150 levels (i.e. 21EMA & 38.2% Fibos) but long build ups for the long run is to be cautiously considered.

No stern buying momentum is observed on this timeframe, the leading oscillators have been highly indecisive at this juncture.

Monthly RSI (14) is struggling break above 48 levels that signal the losing strength in buying interests, any shrink indicated by this indicator should be deemed as a caution for the aggressive bulls.

The same has been the case on stochastic curves, this oscillator has not been indicating any stern spikes in ongoing rallies.

We are not isolating this signal; with the boosted buying momentum confirmed by both leading oscillators (4H charts) the current prices remain well above 7EMA on monthly terms and 7DMA on dailies.

To substantiate this stance, MACD on the other hand, signals indecisiveness on monthly terms but signalled the extension of bullish trend on daily and intraday charts.

Trade tips:

Contemplating above daily bullish sentiment, on trading perspective, it is advisable to buy boundary binaries on dips upper strikes at 144.224 and lower strikes at 143.482 levels, the strategy is likely to fetch leveraged yields as long as underlying spot FX remains within these strikes on or before the binary expiry duration.

Alternatively, at spot reference: 143.721 levels, one can deploy longs in futures contracts of mid-month tenors with the strict stop loss at 143.397 levels with a view to arresting upside risks.

Currency Strength Index: FxWirePro's hourly GBP spot index has turned into -57 (which is mildly bearish), while hourly JPY spot index was at shy above -150 (highly bearish) at 06:07 GMT. For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex.

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