FxWirePro: NZD/JPY Short Trading and Hedging Setup on Breach Below Falling Wedge

NZDJPY’s shooting star pattern at 69.223 level plummets prices below DMAs again in the minor trend. 

Prior to which, the pair has constantly slid below 7-DMAs after the streaks of bearish patterns popped-up at the peaks of rallies. 

Back-to-back gravestone dojis and shooting stars (refer oval-shaped areas on the daily chart). From the last 2-3 days, mild upswings are observed, but, it seems unwise to get bull-trapped by the momentary upswings as both momentum & trend indicators are still bearish bias.

Both RSI and fast stochastic curves show downward convergence to the price slumps to indicate the intensified selling momentum. While MACD & DMAs are indecisive but bearish bias.

On a broader perspective, to substantiate the above standpoint, the major downtrend was sliding through the falling wedge (refer monthly chart). 

The bearish engulfing has occurred at 73.545 levels that intensifies major downtrend below EMAs, this bearish pattern nudges price below EMAs. Bears breach below wedge support, for now, more slumps on the cards as both leading and lagging indicators, on this timeframe, signal bearish trend continuation & shows intensified selling momentum.

Hence, shorts in the mid-month futures have already been advocated with a view of arresting the downside risks. We wish to uphold the same short hedge strategy of mid-month tenor that was advocated in our previous post. 

Alternatively, one can also buy tunnel options spreads with upper strikes at 68.188 and lower strikes at 67.207 levels on the trading grounds.