Gravestone doji keeps a check on hammer: USDJPY hammer pattern at 107.161 level creates interim rallies from 106.780 to the recent highs of 108.162 levels.
These upswings are restrained below 21-DMAs, failure swings have managed to breach below strong support of 107.847 levels.
Consequently, gravestone doji has occurred at 107.778 levels and showing slumps about -0.10% for the day.
Market profile on 4H:
Point of control (PoC) is at 107.720,
Unfair highs – 108.162
Unfair lows – 107.562
Value area (VA) – 107.733 – 107.705
21-SMA – 108.063
7-DMA – 107.487
Stiff resistance – 21-SMA and 107.847 levels. The previous upswings are restrained below these stiff resistance levels.
RSI – Faded at 40 levels, and shows downward convergence to the prevailing slumps to indicate selling strength in the ongoing downtrend.
At this juncture, we could foresee bearish trend sentiments to prolong as the minor trend upon the bearish DMA crossovers and MACD remains in the bearish territory.
Well, on the other hand, if the market is imbalanced, it seeks to find the point of control which is the fair price, and that’s where it will have equal number of options holders and writers. It is most likely to generate a big trend day as the prevailing price to head towards the PoC and may create new PoC.
On a broader perspective, the major downtrend has now resumed with a bearish candle of big real body (refer monthly plotting) after the formations of bearish engulfing candles, slumps below EMAs have retraced more than 61.8% Fibonacci levels as both leading on this timeframe are also in tandem with the selling sentiments and lagging indicators are quite indecisive but bearish EMA & MACD crossover signals weakness.
Trade tips: At spot reference: 107.750 levels (while articulating), contemplating above technical rationale, it is wise to snap any deceptive rallies to initiate fresh short build ups for targets up to 107.482 levels with strict stop loss of 107.976 level, thereby, one can attain a 1:2.5 risk/reward which can keep us at a smart edge.
Alternatively, shorting USDJPY futures contracts of mid-month tenors have been advocated, on hedging grounds ahead of G20 summit that is scheduled for this weekend, we now like to uphold the same positions as the underlying spot FX likely to target southwards below 106 levels in the medium run. Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.
Currency Strength Index: FxWirePro's hourly JPY spot index is inching towards -52 levels (which is bearish), and hourly USD spot index has bearish index is creeping at 26 (mildly bullish) while articulating (at 06:45 GMT).
For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex
