FxWirePro: USD/JPY plummets in falling wedge, bears pop up long leg doji and shooting stars – Stay short via tunnel spreads on bearish SMA crossover

The current price behavior of this pair has been sliding through falling wedge formation (refer 4H chart).

Long-legged Doji and shooting star to evidence more slumps, current price have gone below 7EMAs on the weekly chart.

USDJPY dropped vigorously from the highs of 118.665 levels to the current 112.865 levels, the flurry of bearish streaks occurred especially after long legged doji at 116.942 levels in the uptrend that indicates weakness in this pair.

For now, more slumps seem to be on cards as 7SMA crosses below 21SMA which bearish SMA crossover.

The current prices on intraday charts as well have been struggling to clear 7 & 21SMAs, for now, don't expect sharp rallies, slumps are likely to slide through lower Bollinger band, it is better to devise trading plans that favor bears.

RSI signals gaining strength in selling sentiments as it converges to the mild sideways to downswings on intraday trend and a clear convergence to the slumps on weekly terms, while stochastic has been indecisive on the 4H chart but momentum in selling sentiments has been intensified on weekly terms.

Same is the case with leading oscillators on weekly terms to confirm the shrinking buying momentum as both RSI and stochastic have been diverging to the previous price upswings.

Most importantly, MACD has signaled the downtrend likely to extend on both timeframes.

Trading tips:

Well, as a result of above technical reasoning, on speculative grounds we advise tunnel spreads which are binary versions of the debit put spreads.

This strategy is likely to fetch leveraged yields than spot FX and certain yields keeping upper strikes at 112.949 and lower strikes at 112.556 levels.