FxWirePro: USD/JPY gravestone doji and shooting star plummet prices below DMAs, more slumps likely on potential shooting star on major trend

USDJPY major stiff resistance levels are observed at 111.458, 110.052 and 109.8041 (i.e. 21DMA levels).

While gravestone doji and shooting star patterns have occurred at 110.736 and 111.037 levels to signal weakness, subsequently these bearish patterns have evidenced considerable price slumps (refer daily chart).

For now, you could observe the upswings are restrained below 21DMAs.

On the flip side, the strong support is seen at 108.646 levels.

Ever since the occurrences of shooting star and gravestone doji patterns at peaks of rallies, the current prices have gone below 7DMA levels, signaling more weakness in the days to come.

Both RSI and stochastic curves are showing downward convergence to the ongoing price dips that indicate the strength and intensified momentum in the bearish rallies.

While the trend indicator (MACD) has also shown bearish crossover to substantiate the bearish stance.

The major trend is still stuck between 115.550 and 107.321 levels (refer monthly plotting), the trend shows failure swings exactly at 114.721 levels couple of times in the recent past and we figured out potential gravestone doji pattern on this timeframe.

Overall, although we see any abrupt upside traction and the major downtrend seems to be intact.

Trading tips: Contemplating above technical rationale, we advocate buying tunnel spread binary options strategy with upper strikes at 109.746 and lower strikes at 108.957, this strategy is likely to add magnifying effects to the yields as long as the underlying spot FX remains between these two strikes on expiration.

Alternatively, maintain short hedges by adding shorts in futures contracts of mid-month tenors with a view to arresting downside risks.

Currency Strength Index: FxWirePro's hourly USD spot index has shown 22 (which is mildly bullish), while hourly JPY spot index was at 160 (highly bullish) while articulating at 07:40 GMT. For more details on the index, please refer below weblink:

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

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