FxWirePro: USD/JPY Interim Bulls Nosedives At Wedge Resistance Finally - Trading And Hedging Tips

 USDJPY minor trend moved in rising wedge pattern, where the price, for now, plunges below 109.068 levels or -0.28% upon back-to-back hanging man, long-legged doji and shooting star candles at the stiff resistance of 109.723 levels, the bearish patterns nudge the current trend towards 21DMAs with overbought sentiments as both leading oscillators signal the intensified weakness.

The bearish streaks from the highs of 109.727 levels seem to have halted at 109.144 (i.e. 21-DMAs, refer daily chart).

The vulnerable bulls are absolutely losing the momentum, though they attempted to show some resistance, but we could observe failure swings at the rising wedge resistance and the stiff resistance zone of 109.723 levels. 

The prevailing price dips could drag further up to the next strong support at 108.463 levels if it breaks down 21DMAs.

On a broader perspective, the major downtrend still remains intact on a bearish engulfing patterns with big real bodies (refer monthly plotting), but the major trend is now stuck in the tight range, while the intermediate consolidation phase is wedged between 21 & 100-EMAs.

With leading oscillators signal bearish momentum, while lagging indicators looking quite indecisive but bearish bias, contemplating both interim downswings and the major downtrend in the long term, prolonged range-bounded major trend remains intact.

Trade tips: At spot reference: 109.127 levels (while articulating), contemplating above technical rationale, it is wise to deploy tunnel spread options strategy using upper strikes at 109.429 and lower strikes at 108.463 levels. The strategy is likely to fetch exponential yields than the spot moves as long as the underlying FX remains between these two strikes.

Alternatively, shorting USDJPY futures contracts of mid-month tenors have been advocated, on hedging grounds, we now like to uphold the same positions on the eve of festive season both Christmas and New Year, as the underlying spot FX likely to target southwards up to 107 levels in the medium run. Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.