FxWirePro: GBP/JPY consolidation phase fails again at 23.6% Fibos – Trade one-tocuh put and short hedge as major downtrend back in action

Technical Analysis: GBPJPY consolidation phase has shown failure swings again at 23.6% Fibonacci levels (refer monthly chart).

We see the stiff resistance areas of 148.874 – 149.463 levels. That is where double top formation has occurred with top 1 at 148.572 and top 2 at 148.874 levels that signals weakness in this pair (refer daily plotting). Consequently, the interim bulls are restrained below 21-DMAs. 

Both momentum oscillators are in bearish favor: RSI shows downward convergence with faded strength at 65 levels. While the fast stochastic curve also shows downward convergence to the prevailing downswings to indicate the intensified bearish momentum. 

For now, the prevailing downtrend likely to prolong on the selling interests signaled by the momentum oscillators and bearish DMA & MACD crossovers.

On a broader perspective, the major downtrend that went in the consolidation phase has now resumed bearish streaks again (refer monthly plotting), where the engulfing pattern has occurred at 156.929 and rail-road pattern at 144.165 levels on monthly terms to nudge prices below EMAs.

Most importantly, it is worth to reiterate that the consolidation phase fails again at 23.6% Fibonacci levels from the highs of 156.608 levels, overall, the major downtrend is back in action.

Trade Tips: Before we proceed further, just quickly glance through our previous write-up on this pair, where we advocated short hedges. Refer below weblink for more reading: https://www.econotimes.com/FxWirePro-GBP-JPY-bulls-in-both-minor-trend-and-consolidation-phase-seem-weaker-on-bearish-engulfing-patterns--Trade-boundary-strikes-1439043

Had you initiated those positions, you would have arrested the recent bearish swings and kept on risk on the check.

One can now still uphold shorts in futures contracts of mid-month tenors with a view to arresting further potential downside risks. Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.

Alternatively, on daily trading grounds, at spot reference: 145.171 levels, we advocate constructing tunnel spread, using upper strikes at 145.4847 and lower strikes at 144.136 levels. The strategy is likely to fetch leveraged yields as long as the underlying price keeps dipping but remains above lower strikes on the expiration.

Currency Strength Index:FxWirePro's hourly GBP spot index is flashing -50 (which is bearish), while hourly JPY spot index was at 150 (bullish) while articulating (at 06:19 GMT).

For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex