EURJPY’s minor trend has been travelling through ascending wedge so far, (refer daily plotting).
While the major trend slides in the sloping channel (refer weekly chart), the channel breakout and the sustenance seem to be dubious as the failure swings have clearly been observed at the channel and the wedge resistances from the last 4-5 months.
Occurrences of Shooting star & Gravestone doji at wedge as well as channel resistances (to be precise, at 121.568 & 122.068 levels respectively) and bearish engulfing pattern at 120.657 level resume may resume major downtrend at any time.
Although 21-DMAs provide some sort of cushion but struggling for buying momentum as both leading oscillators signal overbought momentum.
The bullish sentiments or abrupt rallies in the minor trend would only be momentary and unlikely to reverse the major downtrend. You could observe the upswings from the last 3-4 months have shown exhaustiveness at the channel resistance.
Hence, on trading perspective, at spot reference: 121.963 levels, contemplating above technical rationale it is advisable to trade one-touch calls to participate in prevailing rallies, using upper strikes at 122.500 levels.
Alternatively, we advocated shorts in EURJPY futures contracts of far-month tenors with a view to arresting potential dips, since further price dips are foreseen we would like to uphold the same strategy.
