Technical analysis (chart and candlestick patterns occurred): On daily plotting of GBPJPY , bearish engulfing , shooting star , hanging man and spinning top patterns have countered the previous bullish trend to form double top pattern. All these candlestick patterns are bearish in nature have occurred at 147.151, 148.528, 146.521 and 148.982 levels respectively on daily plotting, consequently, we highlighted these patterns and one can observe the selling sentiments ever since then.
Double top pattern (which is bearish in nature): The pair forms top 1 at 147.151, top 2 at 148.982 and neckline at 142.757 levels.
Most importantly, the above-stated bearish patterns are coupled with the bearish signal by leading oscillators and bearish DMA and MACD crossovers.
Hence, today’s price rallies have not been convincing as the momentum and trend are in conformity to the downswings (in bears’ favor).
On a broader perspective, the major downtrend that went in the consolidation phase has now resumed bearish streaks again (refer monthly plotting), where engulfing pattern has occurred at 156.929 and rail-road pattern at 144.165 levels on monthly terms to nudge prices below EMAs and retraced more than 38.2% Fibonacci levels.
Trade tips: We kept reiterating about bulls' exhaustion in the recent past and advise bearish trade setup. Had you initiated those positions, you would have arrested the recent bearish swings and kept on risk on the check.
One can now still uphold shorts in futures contracts of mid-month tenors with a view to arresting further potential downside risks. Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.
Alternatively, on daily trading grounds, at spot reference: 143.360 levels, we advocate constructing tunnel spread, using upper strikes at 143.9360 and lower strikes at 142.815 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.
Currency Strength Index:FxWirePro's hourly GBP spot index is flashing -10 (which is mildly bearish ), while hourly JPY spot index was at -24 (mildly bearish ) while articulating (at 05:32 GMT ).
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