FxWirePo: USD/JPY Minor And Major Trend Analysis – Trading And Hedging Setup

USDJPY has been declining as Japanese Yen outperforms slightly amid the markets' safe-haven sentiments owing to the prevailing contagion threats.

Technically, one could observe the resumption of USDJPY bears upon the formation of 3-black crow pattern at 107.114 levels.

Consequently, the minor trend turns bearish upon the occurrence of this bearish pattern, and frequent failure swings at the stiff resistance zone of 109.400-109.800 levels, the current price slides below DMAs.

While both leading oscillators signal intensified bearish momentum & downtrend continuation on lagging indicators.

On a broader perspective, bears hover at 100-EMAs on the spinning top, this ensures major trend still going in the tight range, while the intermediate consolidation phase that was wedged between 21 & 100-EMAs, now nudges below 100-EMAs (refer monthly chart).

Both leading oscillators (RSI & Stochastic curves) and lagging indicators are bearish bias on this timeframe as well.

Trading tips:

Contemplating above short term technical rationale, you can place below trades to construct tunnel binary options spreads using upper strikes at 107.222 and lower strikes at 105.999 levels, these leveraged instruments are likely to fetch magnified effects in payoff structure as long as underlying spot FX keeps dipping (spot reference: 106.600).

Hedging strategy: Alternatively, considering major downtrend that is stuck in the range, we advocate deploying shorts in futures contracts of July-month tenors with a view to arresting further potential bearish risks.