FxWirePro: Spot out NZD/JPY’s sharp rallies on hammer formation, can bulls form triple bottom? Trade DNT’s and short hedges

NZDJPY bulls spike well above SMAs with healthy bullish momentum, uptrend likely to prolong only upon break-out & sustenance above stiff resistance of 77.714 levels.

Ever since the pair tests strong support at 76.176 levels, the bulls have managed to form the hammer pattern at 76.259 levels on the 2H chart, as a result, you see the sharp rallies.

Consequently, the current price has gone beyond 21SMA levels.

Stiff resistance is seen at 77.050 levels, the failure swings are observed to form shooting star at 76.916 levels.

For now, the minor trend seems to be slightly edgy despite today's vigorous rallies as it tests stiff resistance, any break-out above these levels would continue the bullish trend as the current price remains well above SMAs.

While both leading oscillators (RSI and stochastic curves) converge upwards to the ongoing rallies that indicate the strength and the momentum in the uptrend.

To substantiate this bullish stance, another lagging indicator (MACD) shown bullish crossover to indicate buying sentiments to prolong further (refer 2H chart).

While on the intermediate trend, two bottoms are spotted out at 75.626 and 76.090 levels in the recent past.

The bulls, for now, have managed to test the strong support at 75.541 levels to bounce back towards 7EMAs (refer weekly chart). Thereby, if the uptrend prolongs, then it is most likely to form a triple bottom pattern which is bullish in nature.

But technical indicators on this timeframe are not confirming ongoing price rallies. MACD bearish crossover, on the other hand, indicates the selling sentiment to prolong further.

Thus, this indecisive is deemed to be the pivot points of 77.131 on the north (7EMA) and 75.541 on the south.

Trade tips: At spot reference: 77.001 levels, amid this edgy but bullish trend, on trading perspective, we recommend 1m double-no-touch (DNT) options, using upper strikes at 77.2929 and lower 75.541 strikes.

The trading between these strikes likely to derive certain yields in this perplexed trend in the short term and the intermediate trend, more importantly, these yields are exponential from spot movements.

For cash or nothing, these options would be exercised if the forward prices to remain between both strikes (i.e. 77.2929 > Fwd price > 75.541).

Alternatively, shorting futures contracts of this pair using mid-month tenors are also recommended to arresting bearish risks.

Currency Strength Index: FxWirePro's hourly NZD spot index is inching towards 132 levels (which is bullish), while hourly JPY spot index was at -4 (neutral) while articulating (at 10:31 GMT). For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex.

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