FxWirePro: EUR/JPY Doji Threatens Interim Rallies, Major Downtrend Consolidates – Trade & Hedging Setup

EURJPY doji pops up at 123.916 levels, consequently, bears have been nudging prices towards 7-DMAs. Gravestone doji pops-up at 123.703 levels, ever since then, the pair shows volatile trend.

For now, interim upswings appear to have been exhausted on doji pattern, failure swings to resume minor downtrend. More slumps seem to be on the cards as both leading & lagging oscillators started signalling selling sentiments.

On a broader perspective, the major downtrend develops descending channel, contrary to that, the trend reversal seems likely only upon channel breakout, failure swings may prolong downswings, while both leading & lagging oscillators in tandem with consolidation phase (monthly chart).

Trading and hedging tips:

On trading perspective, at spot reference: 123.505 levels, contemplating above technical rationale it is advisable to trade tunnel options spreads using upper strikes at 123.709 levels and lower strikes at 123.019 levels.

Alternatively, ahead of German and French PMI data announcement, we advocate 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.