FxWirePro: GBP/JPY bears drift in sideways to form whipsaws with hanging man and shooting star – Trade boundaries and short hedge

The recent GBPJPY upswings now seem to have been halted and going back again under the control of bears. 

Technical analysis (chart and candlestick patterns occurred): On daily plotting, ever since the formation of shooting star at 138.994 level the bears have hampered previous bullish swings, and hanging man candles have also appeared in whipsaws pattern at 138.083 and 138.215 levels. 

Bears are lingering in the whipsaws at 7SMAs coupled with the above-stated candlesticks to be wedged to signal selling sentiments. 

As a result, today’s trend has been attempting to slide below 7SMAs, but the momentum and trend indicators are yet to be in conformity to the downswings (but slightly in bears’ favor). 

Before we pitch-in to the long-term analysis, just quickly glance through our previous write-up on this pair, where we advocated short hedges. Refer below weblink for more reading: https://www.econotimes.com/FxWirePro-GBP-JPY-bulls-in-both-minor-trend-and-consolidation-phase-seem-weaker-on-bearish-engulfing-patterns--Trade-boundary-strikes-1439043

Had you initiated those positions, you would have arrested the recent bearish swings and kept on risk on the check.

On a broader perspective, the major downtrend that went in the consolidation phase has now continued bearish streaks again (refer monthly plotting), where engulfing pattern has occurred at 146.754 and rail-road pattern at 144.165 levels on monthly terms to nudge prices below EMAs and retraced more than 78.6% Fibonacci levels.

Trade tips: at spot reference: 137.978 levels, one can now still uphold shorts in futures contracts of mid-month tenors with a view to arresting further potential downside risks. Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.

Alternatively, on daily trading grounds, we advocate constructing tunnel spread, using upper strikes at 138.497 and lower strikes at 137.363 levels. The strategy is likely to fetch leveraged yields as long as the underlying price keeps dipping but remains above lower strikes on the expiration.

Currency Strength Index: FxWirePro's hourly GBP spot index is flashing -106 (which is bearish), while hourly JPY spot index was at 5 (neutral) while articulating (at 08:25 GMT).

For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex