Take a Glance at Technical analysis: CADJPY’s gap down opening (Monday) this week at 82.141 level (refer both daily and weekly charts) that has dragged the bearish sentiments so far in this week.
Although the bulls on that day went jittery upon the formations of various other bearish patterns.
The pair forms head and shoulder coupled with the shooting stars and hanging man patterns on weekly terms have signaled extreme weakness.
Shooting star and hanging man patterns have occurred at the stiff resistance of 83.981 levels on the daily term as well, that’s where failure swings were observed. Shooting star occurred at 85.978 and the hanging man at 83.881 levels on daily terms have shown their bearish business to hit 4-months lows of 81.400 levels, the similar patterns have occurred at the same juncture in the recent past as well.
Both leading oscillators (RSI & stochastic curves’ downward convergence) indicate the intensified momentum in the prevailing selling pressures, while the trend indicators (bearish DMA & MACD crossovers) signal downtrend to prolong further.
While on a broader perspective, the intermediate trend of this pair which is in the consolidation phase since December 2015 has now been forming head and shoulder chart pattern and above stated bearish engulfing pattern drag slumps to develop this pattern (refer weekly plotting).
Head at 91.638, left shoulder at 88.922 and right shoulder at 87.851 levels. Shooting star followed by big bearish candle pop-up at that juncture to hamper previous bullish momentum on this timeframe.
Trade tips: Well, on trading perspective, at spot reference: 81.400 levels, contemplating above technical rationale, it is advisable to deploy one-touch put options strategy using lower strikes at 81.037 levels, the strategy is likely to fetch leveraged yields as long as the underlying spot FX keeps dipping on the expiration.
Alternatively, on hedging grounds, we advocated shorting futures contracts of mid-month tenors, we now wish to uphold the same positions as the underlying spot FX most likely to target southwards 80.544 levels in the medium-term.
Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.
Currency Strength Index: FxWirePro's hourly CAD is flashing at -18 (mildly bearish), hourly JPY spot index is inching towards 65 levels (which is bullish), while articulating (at 06:54 GMT).
For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex
