FxWirePro: GBP/JPY Inverse Saucer Intensifies Major Downtrend – Trade One-Touch Puts and Uphold Short Hedges

GBPJPY bears have constantly been sliding below DMAs, the interim bulls attempt to bounce back with hammer pattern but restrained below 7DMAs. We could foresee more slumps on the cards upon bearish DMA & MACD crossovers and intensified selling momentum.

21-DMA – 132.566

7-DMA – 129.183

Any abrupt upswings are likely to be restrained below these stiff resistance levels.

RSI and fast stochastic curves show downward convergence to the prevailing price slumps to indicate selling strength in the ongoing minor uptrend but faded at 56 levels.

At this juncture, we could foresee bearish trend sentiments to prolong as the minor trend of the pair has slid below DMAs with bearish MACD & DMA crossovers and likely extend slumps up to the stiff resistance of 129.180 levels.

On a broader perspective, the consolidation phase fails at 61.8% Fibonacci levels (refer monthly chart), bears extend through inverse saucer in the minor trend, with the bearish engulfing pattern at 146.754 and 136.767 levels with the intensified selling momentum. 

Thereby, the major downtrend is back in action as downswings, on this timeframe, are on the verge of retracing 88.6% levels.

Trade tips: At spot reference: 128.626 levels, contemplating above technical rationale, one can execute one-touch put options strategy. Such exotic option with lower strikes at 128.111 levels favoring prevailing selling sentiments and fetch leveraged yields as compared to spot.

Alternatively, amid mounting Brexit risk sentiments shorting futures of mid-month tenors are advocated with a view of arresting further potential slumps. Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.