FxWirePro: NZD/JPY Chartpack – Technicals, Trade and Hedging Setup

NZDJPY bulls bounce on hammer and doji formations on daily terms, while bears in the major trend breach descending triangle support (refer 4H chart).

Well, Bulls of this pair take-off above DMAs on the bullish candlestick formations, for now, rallies seem to be most likely but never rule-out overbought (OB) signals.

On the contrary, it has been dipping constantly ever since the formation of back-to-back gravestone dojis at 76.864 and 76.889 levels in the major trend (refer monthly chart), while gravestone doji occurs at 76.752 levels even on weekly terms. Gravestone doji which is bearish in nature that nudges prices below 7EMA levels. Both leading and lagging indicators have also been signaling overbought pressures (on both timeframes).

Most noticeably, the intermediate trend slides through descending triangle pattern which is again bearish in nature. Now, bears have managed to breach below descending triangle supports.

While the major downtrend likely to prolong on bearish EMA and MACD crossovers (refer monthly chart).

As a result, despite the brief rallies since 15thAugust, the current price remains still well below 7EMAs as both leading and lagging indicators bearish bias.

Both RSI and stochastic curves have been constantly showing the downward convergence that indicates the strength and momentum in the bearish interests.

Contemplating the prevailing bullish sentiments in short term and lingering bearish trend remains intact, the below FX derivatives strategies have been advocated to suit both timeframes.

Trading and hedging tips: At spot reference: 74.033 levels, on trading grounds buy one touch call options with strike price at 74.148 levels.

While on hedging grounds, long-term investors should stay short in futures contracts of mid-month tenors. The writers of the futures contract are expected to maintain margins in order to open and maintain a short futures position.

Currency Strength Index: FxWirePro's hourly NZD spot index is inching towards 86 levels (which is bullish), while hourly JPY spot index was at -94 (bearish) while articulating (at 04:42 GMT). For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex