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FxWirePro: GBP/JPY breaches below rising wedge baseline, tumbles into deep tunnels with bearish engulfing – trade double touch puts as more dips on cards

Source FxWire Pro - Technicals Thursday, 1 Mar, 2018 07:03:49 GMT
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GBPJPY has tumbled into deep tunnels ever since the formation of shooting star at peaks of rallies at 153.841 levels which is exactly at rising wedge resistance line.

While same has been the case in the minor trend of this pair, shooting star has occurred at every now & then. Shooting stars have occurred at 155.507, 151.272 and 149.970 levels and observe the price behavior subsequently (refer daily plotting).

While the pair also forms dragonfly doji at 149.730 levels. Accordingly, we had already warned in our previous write-up that even though the bullish pattern evidences minor rallies, the momentum not convincing. Thereby, you’ve seen price slumps so far.

For now, the current prices are well below DMAs despite today's of mild upswings

Consolidation phase restrained below 38.2% fibos, while the intermediate trend of this pair has breached rising wedge support and bears in the major trend have resumed showing their functions.

Just observe as and when shooting star patterns pop up at wedge resistance to signal weakness, accordingly, the considerable slumps are seen (refer weekly plotting).

For now, more price dips seem to be on cards as both leading and lagging oscillators on both daily and weekly timeframes are in bears' favor, the breach below strong support is also substantiating this bearish standpoint.

Trade tips: Contemplating above technical reasoning, price downswings on momentum conformity. With the double touch put option trade, at spot reference: 146.976 levels, we advocate buying put options for the strikes upto 144.234 levels in which the options trader reckons that the price of the underlying spot FX would hit these strikes before the option expiration time. 

Alternatively, on hedging grounds, we advocate shorting futures contracts of near-month tenors as the underlying spot FX likely to target southwards 144 levels in the near run.

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 GBP spot index has turned into -66 (which is bearish ahead of manufacturing PMI, net lending and M4 money supply data prints), while hourly JPY spot index was at shy above 88 (bearish) while articulating (at 06:45 GMT). For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex

The above indices are also conducive to our above trade setup.

FxWirePro launches Absolute Return Managed Program. For more details, visit: 

http://www.fxwirepro.com/invest

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