FxWirePro: GBP/JPY hammer pops at channel supports on intermediate trend, hanging man and shooting star plummet price below DMAs

Chart and candlestick patterns occurred: 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 (refer daily plotting), let’s not forget we cannot afford to isolate this signal.

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

While the intermediate trend so far was spiking through rising channel (refer weekly chart), for now, bulls have managed to bounce back upon the occurrences of hammer patterns at this channel support. As a result, upswings in the consolidation phase spike above EMAs.

Trade tips:

On daily trading grounds, at spot reference: 146.391 levels, we advocate buying tunnel option spreads using upper strikes at 146.6166 and 145.588 as lower strikes. Tunnel spreads are the binary version of the 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 -107 (which is bearish), while hourly JPY spot index was at 43 (bullish) while articulating (at 06:09 GMT). For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex

The above indices are also conducive to the derivatives strategy as advocated above.