FxWirePro: EUR/JPY short setup as bears resume on shooting star and hanging man, caution on deceptive hammer in major trend

Technical Chart and Formations of Candlestick Patterns: EURJPY has shown considerable price rallies upon the occurrences of hammer pattern candles, whereas the shooting star and hanging man patterns counter at peaks of rallies (at 127.256 and 127.231 levels respectively). Consequently, these bearish patterns have hampered previous bullish momentum, and the attempt of today’s upswings are restrained below 7-DMA levels (refer daily plotting).

While on a broader perspective also, bearish engulfing evidences price drops below EMAs (refer monthly chart). For now, the current major downtrend most likely to prolong on bearish EMA and MACD crossovers that are backed by both momentum oscillators (both leading indicators, RSI & stochastic curves) shows downward convergence to signal bearish strength & intensified bearish momentum and weakness remains intact on this timeframe.

Thus, the last month’s interim uptrend now seems to have been exhausted at 21-EMAs on monthly terms as well.

Trade Tips: On trading perspective, at spot reference: 126.307 levels, it is advisable to trade tunnel option spreads, using upper strikes at 126.397 and lower strikes at 126.207 levels, the strategy is likely to fetch you leveraged yields as long as the underlying spot FX keeps dipping but remain between these strikes on the expiration.

Alternatively, shorts in EURJPY futures contracts of mid-month tenors are advocated with a view to arresting potential dips.

Currency Strength Index: FxWirePro's hourly EUR spot index is flashing at -43 levels (which is bearish), while hourly JPY spot index was at 147 (bullish) while articulating at 06:02 GMT.

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