USD/JPY whipsaws signals imminent bears at stiff resistance
A Glance at Technical Analysis:
USDJPY minor trend has been spiking upon hammer pattern candles but bulls seem to have been exhausted at stiff resistance of 112.148 levels. The failure swings are observed at this resistance levels, consequently, whipsaws pattern has occurred. As a result, more slumps are likely for the day as both leading oscillators (RSI & stochastic curves) indicate overbought pressures and the current price has slid below 7-DMAs (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 bullish invalidation on retrace below. Hammer patterns have occurred at frequent intervals, ever since then the price rallies have been considerable, but bearish patterns, such as, hanging man and shooting stars have occurred at peaks that restrain the bullish 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 the tight range.
Trade Tips: Contemplating above technical rationale, at spot reference: 111.832 levels, it is wise to bid tunnel spreads with upper strikes at 112.148 and at 111.5373 (i.e. 21-DMA levels). 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 ahead of BoJ’s monetary policy that is scheduled on Wednesday, we advocate shorting USDJPY futures contracts of mid-month tenors as the underlying spot FX likely to target southwards below 110 levels in the medium run. Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.
Currency Strength Index: FxWirePro's hourly USD spot index was at 53 (which is bullish), while hourly JPY spot index was at 153 (highly bullish) at 06:13 GMT.
USDJPY minor trend has been spiking upon hammer pattern candles but bulls seem to have been exhausted at stiff resistance of 112.148 levels. The failure swings are observed at this resistance levels, consequently, whipsaws pattern has occurred. As a result, more slumps are likely for the day as both leading oscillators (RSI & stochastic curves) indicate overbought pressures and the current price has slid below 7-DMAs (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 bullish invalidation on retrace below. Hammer patterns have occurred at frequent intervals, ever since then the price rallies have been considerable, but bearish patterns, such as, hanging man and shooting stars have occurred at peaks that restrain the bullish 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 the tight range.
Trade Tips: Contemplating above technical rationale, at spot reference: 111.832 levels, it is wise to bid tunnel spreads with upper strikes at 112.148 and at 111.5373 (i.e. 21-DMA levels). 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 ahead of BoJ’s monetary policy that is scheduled on Wednesday, we advocate shorting USDJPY futures contracts of mid-month tenors as the underlying spot FX likely to target southwards below 110 levels in the medium run. Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.
Currency Strength Index: FxWirePro's hourly USD spot index was at 53 (which is bullish), while hourly JPY spot index was at 153 (highly bullish) at 06:13 GMT.