FxWirePro: USD/JPY bears attempt to breach double top neckline, on verge of retracing 38.2% Fibos – Short hedge and tunnel spreads for speculation

For short term traders, a stiff resistance is observed at 109.7386 (i.e. 7WMA levels).

The double top pattern is occurred with peak 1 at 114.370 levels, peak 2 at 114.496 levels and neckline at 108.825 levels, this price behavior is a bearish pattern.

The break-out below neckline likely to drag more price slumps, the current prices slid well below WMAs.

The current prices on major trend slide below EMAs again (refer monthly plotting), don't expect sharp rallies as the major trend seems to be on the verge of 38.2% Fibonacci retracements.

Well, on a broader perspective, the massive volumes formation during the course of this bearish rout is to substantiate the major trend.

Momentum analysis: Both leading oscillators (RSI & Stochastic curves) on both weekly as well as monthly terms have been converging downwards consistently that indicate the intensified momentum and strength in the downtrend.

Trend analysis: Lagging indicators (MACD, 7 & 21 DMAs and EMAs) have also been signaling price slumps to prolong further.

Trading tips: Contemplating above technical rationale, we advocate shorting futures contracts of mid-month tenors in order to arrest further potential slumps. But maintain strict loss at around 109.7386. Writers in a futures contract are expected to maintain margins to open and maintain a short futures position until expiration.

Alternatively, use tunnel spreads with upper strikes at 109.310 and lower strike at 108.825 levels for speculation of this pair.

Currency Strength Index: FxWirePro's hourly USD spot index has shown -127 (which is highly bearish), while hourly JPY spot index was at 67 (bullish) at 06:31 GMT. For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex.

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