FxWirePro: NZD/JPY drifts in narrow range after resembling bearish engulfing pattern, major trend slides below 50% Fibos but long hedges still worthwhile

NZDJPY bullish streaks seem to have been exhausted since last Thursday, but the current price is still above 21-DMAs and EMAs.

Historically, the upswings are exhausted at the stiff resistance of 83.929-82.868 levels, resembling bearish engulfing candle has occurred at 80.979 levels that has evidenced slumps below 7DMA (refer daily chart).

On this timeframe, the ongoing price dips backed by both leading oscillators are moving in tandem with selling sentiments.

RSI converges downwards to the ongoing price slumps as this leading oscillator trending lower from 70 level which is indicating the overbought pressures.

While, same has been the case with stochastic curve, the bearish momentum in selling sentiment is intensified as stochastic oscillator evidences %d crossover which is again bearish signal.

On the flip side, please be noted that although medium and long term bullish sentiments in consolidation phase are still intact as there are no traces of selling indication.

Bulls retrace more than 50% Fibonacci levels but could not sustain above 83.929, consolidation phase restrained below this stiff resistance & 61.8% fib.ret. In contrast, no traces of bearish signals (refer monthly chart).

Thus, it is just deemed as the bears have resumed in the short run. Long traders should keep this in mind and deploy long hedges using futures contracts of mid-month tenors with a view to mitigate upside risks in the consolidation phase.

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