FxWirePro: USD/JPY shooting star pops-up again at 61.8% fibos, bears resume in both minor and major trend – bid 7-dma to execute tunnel spreads
Source: FxWire Pro - Technicals / 20 Aug 2018 00:56:25 America/New_York
- USDJPY has formed shooting star patterns at 112.835 (on daily chart) and 111.868 levels (on monthly plotting) ahead of this week’s FOMC monetary policy minutes as FX market nudges trade war tormentor for a while.
- The above-stated bearish patterns (Shooting star) plummet price below DMAs, for now, more slumps seem to be on cards upon the failure swings below stiff resistance and bearish DMA & MACD crossovers.
- The current trend is wedged between 114.721 and 104.629 levels after the formation of hammer pattern at 111.220 levels on the contrary to the above bearish patterns (refer monthly charts).
- On intermediate trend, bulls are retracing from the March 2018 bottom of 104.629 levels to the November 2017 highs, will foresee further upside traction upto next 61.8% Fibonacci levels (refer monthly plotting). Price action on this timeframe has bounced back into the long-lasting range bounded trend. But the pair has failed to sustain its bullish momentum and slid back below 50% Fibonacci level. As a result, you can trace out shooting star formation at that juncture.
- The major trend has been bearish, but 7-EMA likely to act as the major support at 110.2373 levels. We see bullish invalidation on retrace below.
- Both leading oscillators (RSI and fast stochastic curves) are signaling intensified bearish momentum on both time frames and trend confirmation (both lagging indicators, DMA & MACD show bearish crossovers) on daily plotting.
- While Yen seems to be gaining its traction via safe-haven sentiments.
Trade tips: On trading perspectives, it is wise to bid 7-DMA (110.7681) as upper strikes (stiff resistance at this juncture), and lower strikes 110.316 levels to execute tunnel options spreads.
Alternatively, on hedging grounds, at spot reference: 110.601 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 -121 (which is bearish), while Hourly JPY Spot Index was at -52 (bearish) at 04:38 GMT.
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