FxWirePro: History repeats at GBP/JPY resistance with shooting star, stay short on break below neckline of resembling head and shoulder pattern

GBPJPY has been consistently dipping below 7SMA, cable plummeting to 1.2466.

GBPJPY has formed a resembling head and shoulder pattern with the head at 144.783, 1st shoulder at 142.173 and 2nd shoulder at 144.130 levels (refer 4H charts).

While the downswings of GBPJPY has broken below the neckline of this bearish pattern at 140.733 levels.

From last two months, the pair has been dipping southwards ever since the shooting star pattern has been formed at resistances of 145.546 levels where we could the pair has rendered demand and supply sentiments at this juncture several times in the past (monthly charts).

It has now rejected the stiff resistances at 145.546 levels again to push below 7EMA curves, slumps up to the next strong support at 133.878 levels is possible.

Selling momentum on intraday terms is intensified as we can make out from the leading oscillators (both RSI and stochastic curves) clearly converging to the prevailing price slumps.

MACD on the other hand also signals the extension of its downswings.

While on monthly terms, these indications have been little indecisive; RSI signals the weakness in the recent month’s rallies.

The same has been the case on stochastic curves, this oscillator near oversold territory attempting for %k crossover but bears are attempting to regain selling momentum.

Thus, one can speculate bearish rallies but certainly not yet an investment opportunity in GBP.

Well, as a result of above technical reasoning, on speculative grounds we advise tunnel spreads which are binary versions of the debit put spreads.

This strategy is likely to fetch leveraged yields than spot FX and certain yields keeping upper strikes at 139.8093 and lower strikes at 138.7114 levels.