FxWirepro: Cable Heads Towards Major Resistances, Consolidation Looks Healthy, Flurry of Bearish Candles Threaten – Trading & Hedging Setup
FxWirePro: CAD/JPY Buzzing Bulls Through Uptrend-Line But Seems Momentary, Major Downtrend Still Intact on Head and Shoulder
CADJPY minor trend has been spiking through uptrend line (refer daily chart). We observed a tight tug of war between hammer and bearish engulfing, but bulls triumphed with an upper hand. The current price spikes above DMAs and head towards the stiff resistance zone of 83.237 – 83.981 levels. Any failure swings likely to resume bearish trend again upon overbought pressures.
The major downtrend of this pair which has been in the consolidation phase since December 2015 has now been signalling weakness again upon the formation of head and shoulder pattern and above stated bearish engulfing pattern drag slumps to develop this pattern (refer monthly plotting).
Head at 91.638, left shoulder at 88.922 and right shoulder at 87.851 levels. Shooting star pattern pops-up at that juncture hampers previous bullish momentum on this timeframe.
Overall, the major trend still seems to be weaker amid mild upswings as both momentum oscillators (RSI & Stochastic curves) and bearish EMA & MACD crossovers are still in bears’ favor.
Trade tips: At spot reference: 83.309 levels, ahead of BoJ monetary policy meeting that is scheduled for the next week, contemplating above technical rationale, directional hedging is suggested. On hedging grounds, it is advisable shorting CADJPY CME futures contracts of February-month tenors, simultaneously, go long in December deliveries, as the underlying spot FX likely to target upwards in the near terms and resume downtrend in the major trend.