EURJPY’s minor trend has been sliding through sloping channel until late November, (refer daily plotting). From there onwards, the channel breakout resumes the bullish sentiments in the minor trend and bounces through uptrend line, you could observe the rallies 4th consecutive day. The current trend has constantly been spiking from the lows of 119.991 levels to the current 120.980 levels.
For now, more rallies likely as the current price spikes above DMAs as both leading oscillators substantiate the buying momentum.
The major trend slides through sloping channel, the downswings may resume on failure swings at the channel resistance (refer weekly chart).
RSI shows upward convergence to the current rallies but faded strength at 52 level. While stochastic and MACD still mildly bullish bias. On the contrary, the failure swings likely to bring in a renewed weakness again.
Overall, the major trend remains intact on the weekly terms as the overbought pressures have begun and MACD remains in bearish territory which is below equilibrium level.
Trade tips: On trading perspective, at spot reference: 119.977 levels, contemplating above technical rationale it is advisable to snap deceptive rallies and construct tunnel options spread, using upper strikes at 121.132 and lower strikes at 120.556 levels, the strategy is likely to fetch leveraged yields as long as the underlying spot FX keeps dipping but remains above lower strikes on the expiration.
Alternatively, we advocated shorts in futures contracts of mid-month tenors with a view to arresting potential dips, since further price dips are foreseen we would like to uphold the same strategy ahead of ECB that is scheduled for this week.
