FxWirePro: AUD/JPY Bears Resume On Failure Swings – Trade & Hedging Setup As Major Downtrend Intact On Head & Shoulder Pattern

AUDJPY bears resume their bearish business on the failure swings at the stiff resistance of 70.184 levels. 

For now, any slide below 7 & 21-DMA is most likely to expose more slumps, while both leading oscillators signal bearish pressures.

On a broader perspective, bears disregard hammer at strong support, the major downtrend also resumes upon head and shoulder pattern as both momentum and trend indicators are bearish bias.

The pair with head at 105.433, shoulder 1 at 90.027, shoulder 2 at 90.305 and neckline at 72.007 levels extends major downtrend, breach below neckline signifies the renewed bearishness.

Trade tips: At spot reference: 69.262 level (while articulating), contemplating above technical rationale, tunnel spreads have been advocated using upper strikes at 69.764 and lower strikes at 68.546 levels.

Overall, as we could foresee further downtrend in the months to come, on hedging grounds we advocate shorting futures contracts of mid-month tenors, as the underlying spot FX likely to target southwards below 64 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.