FxWirePro: GBP/JPY Hanging Mans Keep Check On Interim Rallies, Major Downtrend Remains Intact – Trading & Hedging Setup

As predicted in our earlier post, GBPJPY has shown mino rallies amid major downtrend. Currently, the bulls are heading for stiff resistance at 134 - 135 levels. 

Hanging man patterns have occurred at 133.693 and 134.456 levels, these bearish patterns have halted the minor upswings and attempted nudge below 7 & 21-DMAs. Consequently, the interim uptrend moves in whipsaws, for now, more rallies seem likely only up to next stiff resistance zone 134 -135 levels as stated above.

On the contrary, resumption of downtrend cannot be totally ruled out if it slides below DMAs again.

Major Trend Analysis: Major downtrend still remains intact as the consolidation phase has just retraced above 23.6% Fibonacci levels.

For now, the interim upswings likely prolong and on the verge of retracing up to 38.2% Fibonacci levels as both leading oscillators indicate buying momentum but 100-EMA caps this momentary buying sentiments.

RSI and Stochastic curves show upward convergence to the prevailing price rallies to indicate the intensified buying momentum but these leading oscillators have entered in bearish territory.

MACD halts below zero mark which is an equilibrium or bearish territory also substantiates the above bearish stances on a broader perspective.

Trade tips:

Overall, we wish to reiterate that while interim rallies are on the cards, the major downtrend unlikely to reverse.

Trade tips: At spot reference: 133.876 levels (while articulating), contemplating above technical rationale, one can execute one touch call options using upper strikes at 134.756 levels. Such exotic option will participate in upside movement and fetch leveraged yields as compared to spot.

Alternatively, we advocated shorts in 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 by rolling over these contracts for April month deliveries.