Chart and candlestick pattern formed – Hammer pattern candle has occurred at 125.641 levels (refer EUR/JPY daily chart). Consequently, you can make out sharp rallies upon break-out above stiff resistance of 126.722 and 7 & 21-DMA levels. Next stiff resistance level is foreseen at 130.404 levels. The momentum and trend indicators signal strength in more rallies.
While on intermediate trend, Bearish patterns at 61.8% fibonacci levels nudge prices below EMAs, current trend takes support at 38.2% Fibonacci levels.
Hammer patterns has occurred at 127.626 level that spikes off the rallies and on the contrary shooting star pattern pops up at 128.415 levels to counter the bullish momentum and restrain rallies below 21EMAs (refer weekly chart). Bulls, on this timeframe, resume again after retracing 38.2% Fibonacci levels.
While both leading and lagging indicators seem to be indecisive and signal strength and momentum in momentary upswings and weakness remains intact in intermediate trend (refer both daily and weekly plotting).
Trade tips: On trading perspective, at spot reference: 128.941 levels, it is advisable to buy options with boundary strikes, use upper strikes at 129.681 and lower strike at 128.444 levels, the strategy is likely to fetch leveraged yields as long as underlying spot FX remains between strikes on expiration.
Alternatively, deploy shorts in futures contracts of mid-month tenors with a view to arresting potential dips.
Currency Strength Index: FxWirePro's hourly EUR spot index is flashing at 61 levels (which is bullish), while hourly JPY spot index was at -96 (bearish) while articulating at 07:18 GMT. For more details on the index, please refer below weblink:
