- USDJPY has formed bearish engulfing and shooting star patterns at 110.984 and 111.225 levels respectively (on daily chart), at 111.422 levels (on monthly plotting) on BOJ’s Kuroda speechas FX market nudges trade war tormentor for a while. While there is no sign of raising rates for a quite some time and the recent phases to shift policy more flexible are not targeted at placing the groundwork for an eventual exit from its massive stimulus.
- The above-stated bearish patterns (Bearish engulfing and shooting star) plummet price below 7 and 21 DMAs. For now, more slumps seem to be on cards upon the failure swings below stiff resistance of 111.189 areas.
- While the current intermediate trend is wedged between 114.721 and 104.629 levels (refer weekly charts).
- On this timeframe, bulls have retraced from the March 2018 bottom of 104.629 levels to the July 2018 highs (113.176), but currently, prices stuck between 50% and 38.2% Fibonacci levels from last 1 and a half months (refer weekly plotting). Price action on this timeframe has been showing bearish momentum into the long-lasting range bounded trend. But the pair has failed to sustain its bullish momentum and slid back below 7EMAs. As a result, you can trace out shooting star formation at that juncture.
- The major trend has been bearish, but if 21-EMA doesn’t act as the major support, then, we could foresee bullish invalidation on retrace below.
- Both leading oscillators (RSI and fast stochastic curves) are signaling intensified bearish momentum on both time frames.
Trade tips: On trading perspectives, it is wise to bid one touch put options using strikes 110.777 levels capitalizing on prevailing bearish sentiments.
Alternatively, on hedging grounds, at spot reference: 110.927 levels, we advocate shorting futures contracts of mid-month tenors as the underlying spot FX likely to target southwards 109 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.
FxWirePro Currency Strength Index: FxWirePro's Hourly USD Spot Index was at 89 (which is bullish), while Hourly JPY Spot Index was at 141 (strongly bullish) at 07:06 GMT.
For more details on FxWirePro's Currency Strength Index, visit below web-link:
