• FxWirePro: NZD/JPY bearish trade setup as minor trend goes out of inverse saucer, major trend slides through descending wedge

    Source: FxWire Pro - Technicals / 25 Jun 2019 04:14:56   America/New_York

    Majority of the Kiwis currency pairs are attempting to show some rallies ahead of RBNZ monetary policy.

    So is the case with NZDJPY as well. But, please be noted that bearish engulfing pattern pops-up at trendline resistance that hinders the long-term perspectives.

    The minor trend drifts through inverse saucer which is bearish in nature (refer daily chart), and the prevailing rallies unlikely to last longer as the current price still well below 21DMAs, so, never get bull-trapped by the momentary upswings.

    While leading and lagging indicators are indecisive. Fast stochastic curves show downward convergence, no clear %k crossover to the prevailing price rallies to indicate buying momentum. While MACD is still in bearish territory.

    On a broader perspective, to substantiate the above standpoint, the major downtrend slides through the falling wedge (refer monthly chart). 

    The bearish engulfing has occurred at 73.545 levels that intensifies major downtrend below EMAs, this bearish pattern nudges price below EMAs. 

    For now, more slumps on cards as both lagging indicators signal bearish trend continuation & RSI indicated faded strength at 56 levels and bearish bias.

    Hence, we have already advocated maintaining shorts in the mid-month futures with a view of arresting the downside risks. As RBNZ has cut OCR rates by 25 bps in the previous monetary policy, this meeting is expected to be on hold with august season likely to open the door for further stimulus, we could foresee more slumps on the cards. Hence, we wish to uphold the same short hedge strategy of mid-month tenor that was advocated in our previous post. 

    Alternatively, one can also buy tunnel options spreads with upper strikes at 71.266 and lower strikes at 70.758 levels on intraday trading grounds.

    Currency Strength Index: FxWirePro's hourly NZD spot index is inching towards 44 levels (which is bullish), JPY at -74 (bearish), while articulating (at 07:58 GMT). 

    For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex

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