FxWirePro: NZD/JPY buzzing downtrend on stern bearish engulfing exactly at channel resistance – Trade Tunnel spreads and short hedge

NZDJPY has constantly been dipping on the flurry of bearish candlesticks and chart patterns.

Bearish candlesticks, such as, Gravestone doji has occurred at 75.174 and shooting stars at 74.905 and 74.999 levels in the minor trend (refer daily chart), while the stern bearish engulfing pattern has occurred at 73.185 levels on weekly terms which is bearish in nature that nudges prices below 7EMA levels. 

Most noticeably, the intermediate downtrend slides through sloping channel pattern which is again bearish in nature. The engulfing pattern pops-up exactly at the stiff resistance of this channel.

Both leading and lagging indicators have also been signaling momentum in selling pressures (on both timeframes).

Both RSI and stochastic curves have been constantly showing the downward convergence that indicates the strength and momentum in the bearish interests.

While the major downtrend likely to prolong on bearish DMA and MACD crossovers (refer daily chart).

Contemplating the lingering bearish sentiments on both the timeframes, at spot reference: 75.269 levels, on trading grounds we recommend buying tunnel spreads using upper strikes at 73.471 and lower strikes at 72.886 levels.

On hedging grounds, long-term investors should stay short in futures contracts of mid-month tenors. The writers of the futures contract are expected to maintain margins in order to open and maintain a short futures position.

Currency Strength Index: FxWirePro's hourly NZD spot index is inching towards -114 levels (which is highly bearish), while hourly JPY spot index was at 130 (highly bullish) while articulating (at 07:39 GMT). For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex

These indices are also conducive for the above-stated FX strategies.