FxWirePro: EUR/JPY Attempts To Test Support At 76.8% Fibos, Bears Still Capitalize On Channel Breakdown – Trading & Hedging Setup

EURJPY bears resumed today despite minor upswings from the last 3 days. After the highly volatile trading sessions yesterday, the bears trimmed its gains from the highs of 119.037 levels. Consequently, today, the current price has slid below 21-DMAs again.

The pair has been plummeting of late amid macroeconomic breakdown due to pandemic circumstance.

As stated in our previous post, it has plunged from the highs of 121.082 levels to the recent lows of 116.945 level. One can go through below weblink where we had advocated shorts a month ago, refer below weblink for more details: https://www.econotimes.com/FxWirePro-EUR-JPY-Interim-Bulls-Pave-The-Way-For-Fresh-Shorts-In-Major-Downtrend--Technicals-Trading-Hedging-Setup-1574768

Well, the prevailing price slumps in the minor downtrend of this pair is observed upon hanging man pattern at 120.857 level, the minor downtrend started after it breached below channel support (refer daily chart), ever since then the trend has been highly volatile for some time as there has been stiff tug of war between bulls and bears in the range of 116.119 to 120.322 levels. 

For now, more slumps appear to be likely as both leading (RSI & Stochastic curves) and lagging oscillators show downward convergence to the ongoing downtrend to signal the intensified selling sentiments.

On a broader perspective, the major downtrend remains intact below EMAs (refer monthly plotting), although bulls attempt to test support at 78.6% Fibonacci levels, downswings may resume upon failure swings as both leading & lagging oscillators still in tandem with bearish sentiments on this timeframe as well.

Trading and hedging tips: 

On trading perspective, at spot reference: 117.941 levels, contemplating above technical rationale it is advisable to trade tunnel options spreads using upper strikes at 118.627 levels and lower strikes at 117.115 levels.

Alternatively, we advocated shorts in EURJPY 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.