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GBP/JPY technicals & trade set-up

FX:GBPJPY   British Pound/Japanese Yen
300 0 11
Although the pair has taken trendline support at 128.602 but likely to test the resistances at 7DMA levels (i.e. 132.3916 levels).

After the bears managed to push below 21DMA, the current prices have drifted consistently well below 7DMAs (see daily charts ).

Even though the leading indicators approached oversold territories both on daily and monthly terms, there are no traces of convincing bullish crossover.

Selling momentum is still intact as we can make out from the leading oscillators converging downwards along with the dipping prices on the monthly graph.

RSI (14) trending below 30 levels that signals the selling interests.

A convincing %D crossover on slow stochastic even below 20 levels which is oversold territory is one more substantiation for selling momentum .

On a broader perspective, it's been urged price declines ever since the pair formed "hanging man" patterns at peaks of uptrend monthly chart.

We cannot isolate this signal; since then both leading and lagging oscillators have been indicating bearish pressures and consequently, we can see the bearish effects in price curve, even at this current juncture we see no clarity for the price recoveries.

Instead, both leading and lagging indicators are indicative of major trend continuation, MACD has just entered into the  bearish zone with bearish crossover and there has been a 21EMA crossing over 7EMA which is again a bearish signal, so the downtrend would likely continue in the long run.

Trade tips:

On an intraday speculative basis, since implied volatility is very high it is advisable to buy credit put spread (CPS) that comprises of writing an in the money put with shorter expiry and simultaneously initiating longs in OTM put with longer tenors, these positions could be entered in at net credits.

Either any abrupt upswings or even sideway swings would make short side worthless and wipe off the entire value of short puts, so that writer can safely pocket in the initial premiums received. Subsequently, the longs in OTM puts of long-term tenors would take care of major downtrend.
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