A Glance at Technical Analysis:
USDJPY minor trend has been nudging below DMAs after failure swings at stiff resistance of 112.148 levels and pattern, top 1 is at 112.137 and top 2 is seen at 112.400 and neckline is at observed at 109.713 levels.
Bears managed to breach below the neckline at 109.713 level, while both leading oscillators indicate intensified momentum, more slumps likely on DMA & crossovers (refer daily plotting).
On the flip side, the major trend has been in the consolidation phase, even if the rallies extend, maximum targets are up to 61.8% Fibonacci levels in the medium run, however, we couldn’t foresee much chance for this event. While trend indicators are indecisive, we see invalidation on retrace below. patterns have occurred at frequent intervals, ever since then the price rallies have been considerable, but patterns, such as, and shooting stars have occurred at peaks that restrain the prospects.
Well, bulls in the overall major trend, seem to be exhausted at 61.8% Fibonacci levels from the lows of June 2016, (refer monthly plotting), the trend on this timeframe, is stuck in a tight range.
Trade Tips: Contemplating above technical rationale, at spot reference: 109.700 levels, it is wise to bid tunnel spreads with the upper strikes at 109.9694 and at 109.145. The strategy is likely to fetch leveraged yields as long as the underlying spot FX keeps dipping but remains well above lower strikes on the expiration.
Alternatively, on hedging grounds, we advocate shorting USDJPY contracts of mid-month tenors as the underlying spot FX likely to target southwards below 107.318 levels in the medium run. Writers in a contract are expected to maintain margins in order to open and maintain a short position.
Currency Strength Index: FxWirePro's hourly USD spot index was at 136 (which is highly ), while hourly JPY spot index was at -26 (mildly ) at 04:54 GMT .