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AUD/JPY bulls restrained at channel resistance and 7-DMA

FX:AUDJPY   Australian Dollar/Japanese Yen
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AUD/JPY bulls restrained at channel resistance and 7-DMA –Double touch binaries for intraday speculators and DPS             for medium term traders:

You are seeing bearish streaks of AUDJPY             from last three-four days after the formation of bearish engulfing types of pattern at 81.548 levels.

The current prices have gone below 7DMAs, please also be advised that the long-legged doji occurred at 81.529 levels while breaking below 7DMAs.

Additionally, the pair breaks out below supports at 81.250 more declines quite possible.

RSI signals strength in declining trend, while stochastic curves have been indecisive but bearish bias on daily plotting.

On a broader perspective, the major bear trend drifting through the sloping channel (see monthly chart).

Failure swings are observed for now after 4-5 months upswings, if these failure swings comparing with daily bearish streaks then we reckon early signals of bearish pressures in major declining trend, aggressive bears tend to snap rallies to deploy fresh shorts in this scenario.

Volume build-ups are mammoth on daily declining prices that are in conformity to the downtrend.

We see the strength in selling interest confirmed as RSI converging to the corresponding downswings.

While stochastic curves have been adverse to this signal but instead, indicates intensified buying momentum on monthly terms.

Trade tips: As a result of above technical reasoning, double touch option is useful for intraday traders who believe the price of an underlying asset would undergo a large price movement, but who are unsure of the direction. A trader can use a double touch option with barriers at 81.520 and 81.116 to capitalize on this outlook.

Some traders view this type of exotic option as being like a straddle position, since the trader stands to benefit on a calculated price movement up or down in both scenarios.

Alternatively, for medium term traders who are still dubious on further upside potential that is only conditional on sustenance above channel resistance (i.e. 81.777 levels) can go with below option strategy.

For now, we favor short term trend of this pair which is bearish at this juncture, consequently, we advocate debit put spreads of narrow tenors (1w3d) with strikes of 82.500/80.450.

1w ATM IVs are spiking above 14% which is good news for put option holders in prevailing downtrend scenario.
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