Yen seems to reverse trend but stuck in puzzle; Short straddle on EUR/JPY

Technical Purview:

This has always been extremely tough & risky to have opened naked position on non-directional trend. EUR/JPY is now alike a non directional pattern as it is trend near upper bollinger band around 14.3627 levels.

Currently, RSI (14) trending above 70 levels (at 72.5661) with sideways convergence, on closing basis movement should be closely watched if it suggests reversal signals.

Although the overbought situation is to alarm bears  the bulls trying grab back the rallies as the slow stochastic noises with %D line cross over above 80 levels (current %D line flashes at 81.9371).

Option Strategy: Naked Straddle Sale

On a long term hedging perspective, as we see non-directional trend is puzzling this pair we like to remain in safe zone and recommend shorting a straddle.

Short ATM put and ATM call (strikes at 125.403) simultaneously of the same expiry.

Maximum profit for the short straddle is achieved when the EUR/JPY price on expiry is trading at around 125.403 levels only as both the instruments have to wipe off worthless.

So that the options trader gets to keep the entire initial credit taken as profit.