FxWirePro: History repeats for AUD/JPY after equidistant channel travel, shooting stars signal weakness – Construct tunnel spreads for leveraged speculation

After big bearish engulfing pattern candle, bears have managed to remain below 21DMA consistently (refer 4H charts).

History repeats in the major trend, ever since it has broken channel resistance at 80.356 levels, the uptrend in consolidation phase has made equidistant travel (almost more than 750 pips) on upwards and restrained below again after 750 pips travel northward journey  (refer monthly chart).

The shooting star candle patterns have occurred at 86.276 (on daily) and 86.327 levels (on monthly plotting) that signal weakness in this pair.

Despite bullish sentiments from last 2 trading sessions, rallies are restrained below SMAs, expect more slumps on shooting star and bearish DMA crossover.

For now, it has broken strong support at 86.032 levels but hovering at the similar levels with attempts of minor bounces.               

On a broader perspective, after 7-8 months of consolidation phase now seems to be totally exhausted at 50% of Fibonacci retracements from the lows of 72.437 levels (Jun’16 lows).

Upswings exhausted at equidistant upward travel after breaching previous channel resistance, Expect more dips as shooting star signals weakness & on failure swings below 50% Fib.Ret.

The leading oscillators (RSI) is also sensing some sort of resistance at 62 levels, you observe the leading indicator has been gaining or struggling for strength in trend at this juncture (monthly plotting), while the same has been converging downwards to the price dips on intraday charts.

While stochastic evidences no convincing %k crossover even after oversold zone (i.e. 20 levels) to signal the intensified selling sentiments.

To substantiate this weakness, MACD shows prolonged price dips further on (4h charts) and has remained below zero level which is bearish trajectory (on monthly charts).

Trade Tips:

Well, as a result of above technical reasoning, on speculative grounds we advise tunnel spreads which are binary versions of the debit put spreads.

This strategy is likely to fetch leveraged yields than spot FX and certain yields keeping upper strikes at 86.127 and lower strikes at 85.921 levels.

Currency Strength Index: FxWirePro's hourly AUD spot index is showing -58 levels (which is bearish), while hourly JPY spot index was at a tad below -48 (mildly bearish) at the time of articulating (at 07:11 GMT. For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex.

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