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FxWirePro: Spot on EUR/JPY’s Stiff Tug War Between Bulls & Bears At Pivot Point – Trading & Hedging Setup

EURJPY formed gravestone doji at 123.703 levels, ever since then, the pair shows failure swings upon this bearish doji pattern, and bears have been constantly plummeting prices below DMAs despite the volatile trading sessions of late.

It has been plummeting from the highs of 124.120 levels to the recent lows of 119.311 levels (refer daily chart).

The minor trend breaches the crucial pivot levels of 121.131 where it acted as the stiff resistance in the past, where bulls and bears are capitalizing on this level.

For now, more slumps likely for now as both leading oscillators (RSI & stochastic curves) signal intensified selling sentiments.

Please be noted that we had advocated shorts more than month ago, refer below weblink for more details:

For now, the interim upswings appear to have been exhausted as 100-EMA (on monthly) is most likely to cap such deceptive rallies as stated before. Hence, more slumps seem to be on the cards as both leading & lagging oscillators started signalling 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 below 21-EMA as both the leading & lagging oscillators are still in tandem with the bearish sentiments on this timeframe as well.

Trading and hedging tips: 

On trading perspective, at spot reference: 120.736 levels, contemplating above technical rationale it is advisable to trade tunnel options spreads using upper strikes at 121.131 levels and lower strikes at 120.129 levels.

Alternatively, ahead of German, French, & Spanish PMIs, we advocated 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.

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