FxWirePro: USD/JPY bears still challenge below 38.2% Fibos despite buzzing bulls in minor trend on engulfing pattern – Trade boundary binaries and short hedge

USDJPY forms bullish engulfing candlestick patterns at 105.396, 106.842 and 106.600 levels in the recent past. The stern rallies have taken the current prices well above DMAs.

However, the attempts of break out of stiff resistance of 107.688 levels are still preserving bullish sentiments.

The rallies are restrained below 7DMAs for now, with some upward convergence by both leading oscillators.

While both lagging indicators are in conformity to the uptrend. Both DMAs and MACD show bullish crossovers that indicate upswings to prolong further.

On a broader perspective, the pair has managed to retrace more than 38.2% Fibonacci levels from the highs of 125.968 levels to the lows of 75.565 levels in 2011.

The major trend that was stuck in the tight range between 115.451 and 107.116 levels so far has now been breached southwards with bearish EMA & MACD crossovers (monthly plotting). Mild bullish swings are still lingering at 38.2% Fibonacci levels.

As the bears have been constantly nudging prices below EMAs from last 3-4 months and both leading oscillators on this timeframe are signaling intensified selling momentum.

Thereby, you could observe that the momentum in the prevailing bearish swings is building up.

Trading tips: Contemplating above technical rationale, at spot reference: 107.100, it is wise to deploy boundary binaries with upper strikes at 107.688 and lower strikes at 106.9873.

The trading between these strikes likely to derive certain yields in this perplexed trend in the short term, more importantly, these yields are exponential from spot movements.

For cash or nothing, these options would be exercised if the forward prices to remain between both strikes (i.e. 107.688 > Fwd price > 106.9873).

Alternatively, short futures contracts of mid-month tenors with a view to arresting bearish risks.

Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.

Currency Strength Index: FxWirePro's hourly USD spot index has shown -63 (which is bearish), while hourly JPY spot index was at -80 (bearish) while articulating at 10:35 GMT. For more details on the index, please refer below weblink:

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

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