FxWirePro: NZD/JPY shooting star hampers hopes of bulls forming triple bottom – trade writing strangles and short hedge
Source: FxWire Pro - Technicals / 25 Apr 2018 06:08:41 America/New_York
NZDJPY traders on minor trend are extending slumps after shooting star formation which is bearish in nature (refer daily chart).
The current prices slide below DMAs as bulls reject at stiff resistance, for now, the downswings likely to prolong on mostly likely bearish DMA crossover and intensified bearish momentum.
Both leading and lagging indicator to substantiate bearish sentiments.
RSI & stochastic curves show downward convergence that indicates the strength and momentum of selling interests.
MACD also shows bearish crossover to substantiate that the prevailing downswings likely to prolong further.
Contemplating the lingering bearish sentiments in the minor trend, bulls on intermediate trend that seemed to form triple bottom pattern with bottom 1 at 75.626, bottom 2 at 76.090 and bottom 3 75.541 levels are exhausted at 79.615 levels (refer weekly chart) as the bearish pattern as explained above is signifying the selling interests for now.
While both RSI and stochastic curves have been slightly indecisive but signals faded strength in the previous uptrend.
MACD on weekly terms edging in bearish trajectory substantiates price dips to prolong further, this is again adverse on intermediate term, and the upswing extension is likely.
Overall, the intermediate has been oscillating between 83.780 and 75.534 levels from one and half years.
While bearish momentum in short-term selling sentiments is intensified as stochastic oscillator entered in the oversold zone but still evidence %D crossover which is the stern bearish signal.
Hence, on intraday trading perspective, we recommend shorting rallies by deploying binary put options for southward targets.
At spot reference: 77.377 levels, contemplating range bounded oscillation in the intermediate trend, on medium-term trading grounds we recommend buying 1% OTM call options of 1w tenors, simultaneously, 1% OTM puts of the similar expiries, the positions can be established to form strangle shorting at the net credit.
On hedging grounds, long-term investors should short futures contracts of mid-month tenors.
The writers of the futures contract are expected to maintain margins in order to open and maintain a short futures position.
Currency Strength Index: FxWirePro's hourly NZD spot index is inching towards -31 levels (which is bearish), while hourly JPY spot index was at -48 (bearish) while articulating (at 09:51 GMT). For more details on the index, please refer below weblink:
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