NZD/JPY Chartpack - Technicals, Trading & Hedging Setup

Frequent Bearish Candles Remind Double Top Importance In NZD/JPY Minor Trend, Engulfing Checks Major Trend In Falling Wedge:

Although NZDJPY shows interim rallies, these rallies can be deceptive as the bearish momentum has continued. The decline in January could extend below 70.00 if the coronavirus epidemic persists. Event risk during the next week comes from wage data and a leading index.

Technically, back to back spinning top, shooting stars & resembling engulfing patterns nudge prices below DMAs again to remind double top in minor downtrend. Minor trend has formed top 1 at 73.536 and top 2 at 73.346 and neckline at 71.227 levels.

For now, more slumps are on the cards as both leading & lagging oscillators are in tandem with the prevailing price slumps and the above-stated bearish patterns signal weakness at this juncture.

On a broader perspective, to substantiate the above standpoint, the major downtrend was sliding through the falling wedge (refer monthly chart) although it took support at wedge baseline, the interim rallies were capped at 21EMAs. More slumps likely upon bearish engulfing pattern as both lagging indicators signal bearish trend continuation & leading oscillators indecisive but bearish bias.

Hence, shorts in the mid-month futures have been advocated with a view of arresting further downside risks.

Alternatively, one can also buy tunnel options spreads with upper strikes at 70.600 and lower strikes at 69.936 levels on the trading grounds (spot reference: 70.376 levels).