FxWirePro: USD/JPY bulls spike through uptrend line, retrace more than 50% Fibos but major trend still wedged – Trade one-touch call and short hedge

USDJPY bulls on verge of hitting 8-month highs and retracing more than 50% Fibonacci levels after the formation of hammer pattern (refer monthly chart).

Swings in minor trend spike through uptrend-line, as a result, bulls take off prices well above 7DMAs shrugging-off shooting star and hanging man patterns (refer daily chart).

Despite the shooting star and hanging man patterns at peaks of rallies, the pair has broken out major stiff resistance zones of 112.438 – 112.168 levels decisively as traders nudge trade wars tormentor aside. For now, more rallies likely as leading oscillators indicate gaining strength.

Both RSI and stochastic curves are signaling healthy bullish momentum on both timeframes. We could foresee scope for further upside traction. While trend indicators are also substantiating the similar bullish swings to prolong further.

On major trend, bulls are retracing 50% Fibonacci levels from June 2016 bottom of 98.787 levels to the June 2015 highs, however, price action on this timeframe has stuck into the long-lasting range bounded trend.

Moreover, the major trend has been bearish despite the monetary price upswings, but 7-EMA likely to act as the major support at 110.6024 levels. We see bullish invalidation on retrace below.

Key Support and Resistance Levels:  112.168 – 112.438 areas are regarded as the strong support zones. 113.689 level is regarded as the key resistance areas.

Trade tips: On every dip, it is wise to initiate longs for the TP: 112.975 levels with strict SL: 112.810 areas.

Alternatively, at spot reference: 112.898 levels ahead of US Fed’s monetary policy, we advocate shorts in futures contracts of mid-month tenors with a view to arresting potential dips.

FxWirePro Currency Strength Index: FxWirePro's Hourly USD Spot Index was at 22 (which is mildly bullish), while Hourly JPY Spot Index was at -50 (bearish) at 06:23 GMT. 

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