FxWirePro: Sharp Gravestone Doji Counters EUR/JPY’s Interim Rallies, Capitalize On Deceptive Upswings For Short Hedge

EURJPY bears have been constantly nudging prices below DMAs amid the highly volatile trading sessions of late. Gravestone doji pops-up at 123.703 levels, ever since then, the pair shows failure swings upon this bearish doji pattern, and it has been plummeting from the highs of 124.120 levels to the recent lows of 120.254 levels.

While the minor trend breaches below support of 7-DMAs, more slumps likely as both leading & lagging oscillators signal intensified selling sentiments.

Please be noted that we had advocated shorts more than month ago, refer below weblink for more details: https://www.econotimes.com/FxWirePro-EUR-JPY-Interim-Bulls-Pave-The-Way-For-Fresh-Shorts-In-Major-Downtrend--Technicals-Trading-Hedging-Setup-1574768

For now, the interim upswings appear to have been exhausted as 100-EMA (on monthly) is most likely to cap such deceptive rallies. Hence, more slumps seem to be on the cards as both leading & lagging oscillators started signalling selling sentiments.

On a broader perspective, the major downtrend remains intact below EMAs, while bears managed to retrace 78.6% Fibonacci levels (monthly chart). 

Downswings may resume upon failure swings below 21-EMA as both the leading & lagging oscillators are still in tandem with the bearish sentiments on this timeframe as well.

Trading and hedging tips: 

On trading perspective, at spot reference: 121.377 levels, contemplating above technical rationale it is advisable to trade tunnel options spreads using upper strikes at 121.906 levels and lower strikes at 119.806 levels.

Alternatively, ahead of Italian employment and French CPI data and next week’s BoJ monetary policy, we advocate shorts in EURJPY futures contracts of mid-month tenors with a view to arresting potential dips, since further price dips are foreseen we would like to uphold the same strategy.