FxWirePro: Renewed bearish traction for EUR/JPY on breakdown below neckline of head and shoulder, major trend on verge of multi-months lows

EURJPY bears nudge below SMAs again on shooting star formation at 121.702 levels (refer 4H chart). 

Although we see mild price rallies currently in this trading session, weakness is quite visible upon a flurry of bearish patterns, the trend for the day appears to be absolutely edgy with renewed weakness.

Technical chart and candlestick patterns formed: Shooting stars have occurred at 121.702 levels followed by the bearish engulfing pattern at 121.223 levels (refer 4H chart). 

For now, the current major downtrend is most likely to prolong bearish swings that are backed by both momentum oscillators as both leading indicators (RSI & stochastic curves) show downward convergence that signal bearish strength and the intensified selling momentum and weakness remains intact on the monthly terms.

While hammer pattern candle pops-up at 124.601 levels that evidenced upswings, whereas bears hamper upswings below 7EMAs, consequently, prices have plummeted as the bears have staged for multi-months’ lows, accordingly, bearish trade setup is advocated as the major downtrend shrugs-off hammer(refer monthly chart).

Trade tips: On trading perspective, at spot reference: 121.022 levels, it is advisable to trade tunnel option spreads, using upper strikes at 121.286 and lower strikes at 121.847 levels, the strategy is likely to fetch leveraged yields as long as the underlying spot FX 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. We now wish to roll over these contracts for July month deliveries.

Currency Strength Index: FxWirePro's hourly EUR spot index is flashing at -88 levels (which is highly bearish), while hourly JPY spot index was at 102 (highly bullish) while articulating at 05:50 GMT.

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