Technicals And FxWirePro Derivatives Trading Setup: GBP/JPY bulls uproar on buzzing engulfing pattern

GBPJPY bears extend through inverse saucer in the minor trend, but for now, bulls bounce back with engulfing pattern at 136.138 levels with the intensified buying momentum, 

More rallies seem to be on the cards upon bullish SMA & MACD crossovers.

Market profile on 4H charting: 

Point of control (PoC) is at 136.560, 

Unfair highs – 136.829

Unfair lows – 136.378

Value area (VA) – 136.679 – 136.485

21-SMA – 136.348

7-DMA – 136.561

Stiff resistance –137.019 levels. The upswings are likely to be restrained below these stiff resistance levels.

RSI – shows upward convergence to the prevailing price rallies to indicate buying strength in the ongoing minor uptrend but faded at 56 levels.

At this juncture, we could foresee bullish trend sentiments to prolong as the minor trend of the pair has spiked above SMAs with bullish MACD & SMA crossovers and likely extend rallies up to the stiff resistance of 137.019 levels.

Well, on the other hand, if the market is imbalanced, it seeks to find the point of control which is the fair price, and that’s where it will have the equal number of options holders and writers. It is most likely to generate a big trend day as the prevailing price revolves around the new PoC.

On a broader perspective, contrary to the above bullish stance, the consolidation phase fails at 61.8% Fibonacci levels (refer monthly chart). Thereby, the major downtrend is back in action as downswings, on this timeframe, are on the verge of retracing 78.6% levels.

Trade tips: At spot reference: 136.640 levels, contemplating above technical rationale, one can execute one-touch call options strategy for day trading. Such exotic option with upper strikes at 137.019 levels favoring prevailing buying sentiments and fetch leveraged yields as compared to spot.

Alternatively, ahead of BoE and BoJ monetary policy meetings scheduled for this week, shorting futures of mid-month tenors are advocated with a view of arresting further potential slumps. Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.

Currency Strength Index: FxWirePro's hourly GBP spot index is inching towards 8 levels (which is neutral), JPY is at 2 (neutral) while articulating (at 07:17 GMT). 

For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex