FxWirePro: NZD/JPY Interim Rallies Seem Deceptive, Major Downtrend Still Intact In Falling Wedge – Trading & Hedging Setup

NZDJPY has been oscillating in a range between 71.673 and 68.196 levels from the last couple of days.

The failure swings are observed at the stiff resistance of 71.673 levels, although we see some rallies today, the interim upswings could be deceptive as minor downtrend may resume anytime upon bearish momentum (refer daily chart). The current price is still hovering below 21-DMAs despite prevailing upswings.

We could foresee strong intraday support at 69.502 levels and stiff resistance at 70.500 levels.

On a broader perspective, the major downtrend slides through falling wedge (refer weekly plotting). Bulls test wedge support & attempt to bounce but remain below wedge resistance.

Trade tips: At spot reference: 70.185 levels (while articulating), contemplating above technical rationale, one can execute boundary options strategy. Such exotic option with upper strikes at 70.500 and lower strikes at 69.500 levels likely to fetch exponential yields than the spot moves.

Alternatively, ahead of RBNZ monetary policy that is scheduled for this week, shorting NZDJPY futures contracts of mid-month tenors have been advocated, on hedging grounds, we now like to uphold the same positions as the underlying spot FX likely to target southwards up to 68 levels in the medium run. Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.