As stated in our previous write up, EURJPY bearish trend remains intact.
The upswings from last 4 consecutive days are absolutely exhausted after failure swings at the resistance of 21-EMA.
But in the major trend, the flurry of bearish streaks from last 4-months is still below 7EMAs and not far away from the recent lows of 114.8240 levels.
Most notably, the pair is on verge of extending handle formation adjoining inverse saucer in the major downtrend. You could very well observe the bears have managed to drag the slumps from the highs of 124.0940 levels to the current 117.1150 levels. This bearish sentiment is backed by momentum oscillators.
Please be noted that despite ongoing stern rallies from last 4 days, the current prices have been well below 7 and 21EMA on monthly chart and below 21EMA levels on weekly chart.
Thus, we think the previous upswings have now been absolutely exhausted after failure swings at this resistance level, more slumps likely as current price slide southwards 113.3602 levels.
RSI (14) has been converging below 39 levels (while articulating) to the declines that signal the strength in downtrend, while stochastic curves are also (at 50 levels) evidencing %D crossover that signal strong selling momentum but this has been little indecisive on monthly terms although bearish biasedness is seen at this level.
While MACD remains within the bearish trajectory that indicates the extension of price declines.
Thereby, the 6 months of consolidation phase now seems to be deceptive and extension of dips seems most likely as lagging oscillators have been indecisive but slightly in bears favor while momentum is in bears’ favor.
Contemplating above technical reasoning, for intraday trading perspective, it is advisable to buy boundary binaries on dips upper strikes at 117.600 and lower strikes at 116.3183. The speculators are likely to add magnifying effects to their yields as long as spot FX remains within these strikes on expiration.
Alternatively, on hedging grounds we advocate shorting futures contract of mid-month or near month expiries to arrest potential slumps upto 113.3602 and 112.500 levels also cannot be ruled out upon breach of the 1st target.