FxWirePro: GBP/JPY hammer patterns cushion slumps at rising channel support, shooting star & hanging man nudge bears towards sloping channel

Chart and candlestick patterns occurred: Hammer pattern candlesticks have occurred at 146.099 and 146.132 levels, the intermediate trend of this pair has been spiking through rising channel pattern (refer weekly chart), for now, the bulls are attempting to bounce back upon the occurrences of these bullish patterns exactly at this channel support. As a result, we see upswings for this week in the consolidation phase but still remained below EMAs as the momentum oscillators still signal weakness.

Whereas, on the contrary, hanging man and shooting star patterns have occurred at 148.642 and 148.589 levels, one can observe the bearish sentiments thereafter. Consequently, these bearish patterns plummet below DMAs towards sloping channel (refer daily plotting), let’s not forget we cannot afford to isolate this signal.

The above bearish pattern is coupled with both the leading oscillators and bearish DMA and MACD crossovers.

Trade tips:

On daily trading grounds, at spot reference: 145.974 levels, we advocate buying tunnel option spreads using upper strikes at 146.365 and 145.374 as lower strikes. Tunnel spreads are the binary version of debit put spreads, the strategy is likely to fetch positive yields as long as the underlying price keeps dipping but remains well above lower strikes on binary expiration.

Alternatively, one can initiate shorts in futures contracts of mid-month tenors with a view to arresting potential downside risks. 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 GBP spot index is flashing -103 (which is bearish), while hourly JPY spot index was at -109 (bearish) while articulating (at 05:40 GMT). For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex