FxWirePro: EUR/JPY Bears’ Upper Hand Amid Straddling Trend – Trading & Hedging Setup

EURJPY bears have been gaining upper hand amid the highly volatile trading sessions of late. The pair has been plummeting from the highs of 122.875 levels to the recent lows of 116.119 level.

Please be noted that we had advocated shorts more than a month ago, refer below weblink for more details: https://www.econotimes.com/FxWirePro-EUR-JPY-Interim-Bulls-Pave-The-Way-For-Fresh-Shorts-In-Major-Downtrend--Technicals-Trading-Hedging-Setup-1574768

The minor trend of this pair has breached below wedge support (refer daily chart), ever since then the trend has been highly volatile as there has been stiff tug of war between bulls and bears in the range of 116.119 to 120.322 levels. 

Amid this journey, bears managed to plummet the prices below 7, 21 & 100-DMAs to signify the bears’ upper hand. For now, more slumps appear to be likely as both leading (RSI & Stochastic curves) and lagging oscillators signal selling sentiments.

On a broader perspective, the major downtrend remains intact below EMAs (refer monthly plotting), downswings may resume at any time upon failure swings at the stiff resistance of 61.8% Fibonacci levels as both leading and lagging oscillators in tandem with bearish sentiments on this timeframe as well.

Trading and hedging tips: 

On trading perspective, at spot reference: 118.758 levels, contemplating above technical rationale it is advisable to trade tunnel options spreads using upper strikes at 119.006 levels and lower strikes at 117.719 levels.

Alternatively, we advocated shorts in EURJPY futures contracts of mid-month tenors with a view to arresting potential dips, since further price dips are foreseen we would like to uphold the same strategy.