Short GBP/JPY Chartpack - Technicals & Trade Setup | October 29, 2018

GBP/JPY minor bulls unlikely to prolong, buzzing bears in major trend on engulfing and potential railroad patterns – Uphold short hedge:

GBPJPY 0.08%  chart and candlestick patterns occurred: On daily plotting, bearish engulfing , shooting star and hanging man patterns have occurred to counter the previous bullish trend . All these candlestick patterns are bearish in nature have occurred at 147.151, 148.528 and 146.754 levels respectively that forms whipsaws on DMAs, one can observe the selling sentiments ever since then.

Hence, today’s price rallies have not been convincing as the momentum and trend are not confirmed.

The above bearish patterns are coupled with leading oscillators and bearish DMA and MACD crossovers.

On a broader perspective, the major downtrend that went in the consolidation phase has now resumed bearish streaks again, where engulfing pattern has occurred at 156.929 and most likely rail-road pattern at 143.620 levels on monthly terms to nudge prices below EMAs.

Trade tips: On daily trading grounds, at spot reference: 143.636 levels, we advocate constructing tunnel spread, using upper strikes at 144.185 and lower strikes at 142.775 levels. The strategy is likely to fetch leveraged yields as long as the underlying price keeps dipping but remains above lower strikes on the expiration.

Alternatively, one can initiate shorts in futures contracts of mid-month tenors with a view to arresting potential downside risks. 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 is flashing -107 (which is bearish ), while hourly JPY spot index was at 80 ( bullish ) while articulating (at 06:35 GMT             ).