FxWirePro: EUR/JPY Interim Upswings Capped By 21-DMAs, Uphold Short Hedges As Major Downtrend Seems Robust

EURJPY bears have been constantly nudging prices below DMAs amid the highly volatile trading sessions of late. The pair has been plummeting from the highs of 122.875 levels to the recent lows of 114.397 levels.

Please be noted that we had advocated shorts more than 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

For now, the interim upswings have been restrained constantly below 7 & 21-DMAs. 

Ever since the minor trend breaches below channel support and forms hanging man pattern candle, the pair plummets prices below DMAs amid abrupt rallies (refer daily chart).

More slumps seem to be on the cards as both leading & lagging oscillators signal selling sentiments.

On a broader perspective, the major downtrend remains intact below EMAs, while bears managed to retrace 78.6% Fibonacci levels (monthly chart).

Downswings may resume upon failure swings as both the leading & lagging oscillators still in tandem with bearish sentiments on this timeframe as well.

Trading and hedging tips: 

On trading perspective, at spot reference: 116.101 levels, contemplating above technical rationale it is advisable to trade tunnel options spreads using upper strikes at 116.412 levels and lower strikes at 115.474 levels.

Alternatively, ahead of eurozone PMIs, we advocate 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.