FxWirePro: CAD/JPY tumbles after shooting star breaches wedge support, no traces of bounce back in both minor and intermediate trend - Trade tunnel spread and short hedge

Before we begin with this write-up, please glance through the below weblinks where we’ve raised the red-flags about early signs of CADJPY’s bearishness:

https://www.econotimes.com/FxWirePro-Hawkish-BoC-unlikely-to-hike-this-season-on-Canadian-GDP-but-constructive-through-2018-CAD-JPY-options-strips-on-its-well-functionality-1180202

https://www.econotimes.com/FxWirePro-CAD-JPY-back-to-back-shooting-stars-breach-wedge-baseline-trend-goes-sideways-after-steep-slumps-Trade-tunnel-spreads-as-more-dips-on-cards-1166356

https://www.econotimes.com/FxWirePro-CAD-JPY-bears-imminent-after-breach-below-rising-wedge-support-but-hammer-counters--Trade-tunnel-spreads-and-short-hedge-1193957

We kept reiterating bearish potential in this pair and advocated short hedges accordingly. If you see the technical charts for the price slumps, it has tumbled into deep tunnels. Rest is history.

Well, moving forward, even in the current trend of this pair, frequent occurrences of shooting stars at 83.115, 83.156, 83.141 and 83.231 levels respectively (refer 4H charts). These bearish patterns are followed by the bearish engulfing pattern with the big real body which is again a serious indication of weakness.

As a result, the bears have managed to remain constantly below 7SMAs.

Needless to say, the similar patterns have also managed to breach below rising wedge baseline that has acted as the strong support so far in the intermediate trend (on weekly plotting).

On the broader perspective, the major bearish trend has now resumed especially after the breach below wedge baseline and the shooting stars formations on this timeframe, while both leading & lagging indicators substantiate.

On both intraday and weekly terms, both RSI and stochastic curves have constantly been converging downwards to selling interests that confirms the strength and momentum of the bearish trend.

To substantiate this bearish stance, the trend indicators (MACD, 7 & 21EMAs on weekly terms) have also been showing bearish crossovers that signal downtrend to prolong further.

Trade tips: Contemplating both short and intermediate trend observations, it is wise to buy tunnel spreads binary option strategy with upper strikes at 81.4144 (7SMA levels) and lower strikes at 80.704 levels, with this leveraged product one can add magnified impact on the trade yields if the underlying spot FX keeps dipping but remains above lower strikes on expiration.

On the other hand, uphold shorts in futures contracts of near-month tenors with a view to arresting further potential slumps.

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 CAD spot index is displaying shy above -109 levels (highly bearish), while hourly JPY spot index was at 80 (bullish) while articulating (at 06:38 GMT). For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex

These indices are also conducive to our trade strategy.

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